Innovation and Adoption of Electronic Business Technologies

Kai Sülzle
Authors registered in the RePEc Author Service: Kai E. Suelzle

No Ifo Working Papers No. 38, Ifo Working Paper Series from Ifo Institute for Economic Research at the University of Munich

Abstract: This paper presents a duopoly model of e-business technology adoption. A leader and a follower benefit from a new e-business technology with uncertain quality depending on its innovation and adoption cost and both firms’ adoption timing. When innovation and adoption require large set-up costs, the leader favors quick adoption by the follower. The follower prefers either late or no adoption. This is due to a delayed first-mover benefit which stems from an innovators’ capability to impose a new technology standard. It is shown that inter-firm adoption subsidies are a viable tool to quicken adoption.

Keywords: Electronic business; adoption; innovation; network effects (search for similar items in EconPapers)
JEL-codes: L10 O31 (search for similar items in EconPapers)
Date: Written

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