Disruption costs, learning by doing, and technology adoption

Carlos Pérez () and Carlos J. Ponce

International Journal of Industrial Organization, 2015, vol. 41, issue C, 64-75

Abstract: We study technology adoption in a dynamic model of price competition. Adoption involves disruption costs and learning by doing. Because of disruption costs, the adopting firm begins in a market disadvantage, which may persist if its rival captures the customers that the adopting firm needs to learn the technology. The prospect of future rents by the rival results in: (i) a failure to adopt socially efficient technologies; (ii) an equilibrium preference for technologies that are learned faster but have lower social value; and (iii) more technologies being adopted if more firms enter the market.

Keywords: Technology adoption; Adoption breakdowns; Dynamic Bertrand competition; Bertrand sum; Discounted Bertrand sum; Endogenous impatience (search for similar items in EconPapers)
JEL-codes: D4 L1 O3 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:41:y:2015:i:c:p:64-75

DOI: 10.1016/j.ijindorg.2015.03.010

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