Sequential technology adoption with asymmetric firms

Arghya Ghosh () and Munirul Haque

Journal of International Trade & Economic Development, 2006, vol. 15, issue 2, pages 157-172

Abstract: We analyse the incentives and welfare implications of costly technology adoption in a two-period duopoly model where firms have different amounts of capital. We also extend our framework to an open economy set-up and examine the relationship between trade and technology adoption. Our findings are as follows. First, no monotone relationship exists between the threshold cost of adoption and capital shares. Second, an unequal distribution of capital, despite lessening competition, can increase total surplus. Third, trade generally encourages adoption of modern technology unless the share of capital for the adopters is too low.

Keywords: Asymmetry; Cournot duopoly; technology adoption; trade; surplus (search for similar items in EconPapers)
Date: 2006
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