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Technology adoption: Hysteresis and absence of lock-in

Paolo Colla () and Filomena Garcia ()

Economics Letters, 2016, vol. 141, issue C, 107-111

Abstract: We introduce a simple model of technology adoption with overlapping generations of players. Technologies generate network effects, and players are both backward- and forward-looking. We use results from the supermodular games literature to guarantee equilibrium existence and uniqueness. In line with the empirical literature, the equilibrium adoption path exhibits hysteresis and technologies cannot lock-in. We characterize the expected time of adoption, which can be seen as a measure of technology dominance.

Keywords: Path dependence; Supermodular games; Overlapping generations; Stochastic technology values (search for similar items in EconPapers)
JEL-codes: C73 D84 L14 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.econlet.2015.12.017

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