Leapfrogging: Time of Entry and Firm Productivity

Josh Ederington and Georg Goetz ()
Additional contact information
Georg Goetz: University of Giessen
Authors registered in the RePEc Author Service: Georg Götz

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: We develop a model in which ex ante identical firms make endogenous entry and technology adoption decisions. We show that this model is capable of matching the stylized facts in which entry and adoption are dispersed over time and that, in many industries, it is the newest firms which are the most likely to exhibit high productivity growth and adopt new innovations (i.e., leapfrogging). We then derive the characteristics of those industries where such leapfrogging is likely to occur and show that leapfrogging can induce reverse preemption (i.e., forward-looking incumbent firms delaying entry and adoption due to leapfrogging behavior). As an application, we demonstrate how, in an industry conducive to leapfrogging, research subsidies can actually reduce short-run consumer welfare by discouraging firms from entering the market with a basic technology.

Keywords: entry; technology adoption (search for similar items in EconPapers)
JEL-codes: L11 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2018
New Economics Papers: this item is included in nep-com, nep-eff, nep-ent, nep-ino and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.uni-marburg.de/fb02/makro/forschung/mag ... -2018_ederington.pdf First 201811 (application/pdf)

Related works:
Working Paper: Leapfrogging: Time of Entry and Firm Productivity (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201811

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