The Impact of Competition on Technology Adoption: An Apples-to-PCs Analysis

Adam Shapiro and Adam Copeland

No 181, 2010 Meeting Papers from Society for Economic Dynamics

Abstract: We study the effect of market structure on a firm's decision to adopt a new technology in the personal computer industry. This industry is unusual because there exists two horizontally segmented retail markets with different degrees of competition: the IBM compatible (or ``PC") platform and the Apple platform. We first document that relative to Apple, producers of PCs have more frequent technology adoption, shorter product cycles, and steeper price declines over the product cycle. We then develop a parsimonious vintage-capital model which is able to match the different stylized facts of PC and Apple producers. The model predicts that competition is the key driver of the rate at which technology is adopted.

Date: 2010
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Working Paper: The Impact of Competition on Technology Adoption: An Apples-to-PCs Analysis (2010)
Working Paper: The impact of competition on technology adoption: an apples-to-PCs analysis (2010)
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