Monopolistic Competition and the Diffusion of New Technology

Georg Götz

RAND Journal of Economics, 1999, vol. 30, issue 4, 679-693

Abstract: This article analyzes the adoption and diffusion of new technology in a market for a differentiated product with monopolistic competition. I show that in a noncooperative equilibrium ex ante identical firms adopt a new technology at different dates. This equilibrium can be described by a simple distribution function. For nonidentical firms, I state the conditions under which a positive relationship between firm size and speed of adoption exists. The model integrates rank and stock effects. I demonstrate that increased competition often promotes diffusion.

Date: 1999
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