The Timing of New Technology Adoption: The Case of MRI

Philipp Schmidt-Dengler

No 3, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: This paper studies the adoption of nuclear magnetic resonance imaging (MRI) by US hospitals. I consider a timing game of new technology adoption. The dynamic game allows me to take both timing decisions and strategic interaction into account. The model can be solved using standard dynamic programming techniques. Using a panel data set of US hospitals, cross sectional variation in adoption times, market structure and demand is exploited to recover the profit and cost parameters of the timing game. In counterfactual experiments I decompose the cost of competition into a business stealing and a preemption effect. I find substantial changes in adoption times and industry payoffs due to competition. These changes are mostly due to a business stealing effect. Preemption accounts for a significant but small share of this change

Keywords: Technology Adoption; Preemption; Dynamic Oligopoly (search for similar items in EconPapers)
JEL-codes: I11 L13 O3 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (30)

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Persistent link: https://EconPapers.repec.org/RePEc:red:sed006:3

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