On the Joint Decisions of R&D and Technology Adoption

Tom K. Lee
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Tom K. Lee: Department of Economics D-008, University of California, San Diego, La Jolla, California 92093

Management Science, 1985, vol. 31, issue 8, 959-969

Abstract: This paper attempts to bridge the gap between R&D models that do not consider technology adoption decisions and technology adoption models that do not consider R&D decisions. It develops and analyzes a decision-theoretic model on the joint decisions of R&D and technology adoption of a firm. Two interesting comparative statics results are obtained. First, an increase in the cost of R&D reduces the incentive for a firm to do R&D. Secondly, an increase in the cost of technology adoption or an increase in the market interest rate reduces the incentive for a firm to adopt new technology and also reduces the incentive for a firm to do R&D. Under certain conditions, an increase in the cost of R&D increases the incentive for a firm to adopt new technology.

Keywords: research and development; economics (search for similar items in EconPapers)
Date: 1985
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:31:y:1985:i:8:p:959-969

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