The Diffusion of New Technologies: Evidence from the Electric Utility Industry

Nancy Rose and Paul Joskow

RAND Journal of Economics, 1990, vol. 21, issue 3, 354-373

Abstract: This article investigates the effect of firm size and ownership structure on technology adoption decisions using data on the electric utility industry. We argue that traditional models of technology diffusion may be subject to sample selectivity biases that overstate the effect of firm size on adoption probabilities. By extending conventional hazard rate models to use information on both adoption and nonadoption decisions, we differentiate between firms' opportunities for adoption and their underlying adoption propensities. The results suggest that large firms and investor-owned electric utilities are likely to adopt new technologies earlier than are their smaller and publicly owned counterparts. Moreover, the selection biases from conventional statistical models may overstate size effects and understate ownership and factor cost effects by as much as a factor of two.

Date: 1990
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Related works:
Working Paper: The Diffusion of New Technologies: Evidence from the Electric Utility Industry (1988)
Working Paper: The Diffusion of New Technologies: Evidence From the Electric Utility Industry (1988)
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