Strategic timing of adoption of new technologies under uncertainty: A note

This note clarifies the circumstances under which ex ante identical firms will choose different dates for the adoption of new technology. In particular, conditions under which “diffusion” will arise in both open-loop and closed-loop games are identified. Furthermore, it is shown that the rents of no...

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Bibliographic Details
Published inInternational journal of industrial organization Vol. 18; no. 2; pp. 369 - 379
Main Author Gotz, Georg
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.02.2000
Elsevier
North-Holland
Elsevier Sequoia S.A
SeriesInternational Journal of Industrial Organization
Subjects
Adoption
Competition
Diffusion
Economic models
Equilibrium
Mathematical economics
New technology
Pay-off
Pre-emption
Profit maximization
Rent
Rent equalization
Studies
Technological change
Technology adoption
Uncertainty
Rent equalization
Diffusion
O31
Pre-emption
Adoption
O32
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Summary:This note clarifies the circumstances under which ex ante identical firms will choose different dates for the adoption of new technology. In particular, conditions under which “diffusion” will arise in both open-loop and closed-loop games are identified. Furthermore, it is shown that the rents of nonidentical firms are not equalized, even if pre-emptive adoption is possible. Finally, an example is given in which the reduction of the uncertainty associated with the implementation of new technology leads to a postponement of the adoption by the late adopter.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0167-7187
1873-7986
DOI:10.1016/S0167-7187(98)00016-2