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Dynamic Modelling of Innovation Process Adoption with Risk Aversion and Learning

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  • Tsur, Yacov
  • Sternberg, Menachem
  • Hochman, Eithan
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    Abstract

    This paper presents a model that incorporates dynamic factors of how firms decide on the adoption of an innovation process. Two factors in particular are considered: learning by using and expectations about future prices of the innovation. The firm's diffusion path is derived from a dynamic optimization task allowing for the decisionmakers to be risk averse. The paper investigates the effects of risk aversion, learning, and firm size. Various properties of the model are illustrated numerically. Copyright 1990 by Royal Economic Society.

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    Bibliographic Info

    Article provided by Oxford University Press in its journal Oxford Economic Papers.

    Volume (Year): 42 (1990)
    Issue (Month): 2 (April)
    Pages: 336-55

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    Handle: RePEc:oup:oxecpp:v:42:y:1990:i:2:p:336-55

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    Cited by:
    1. Lücke, Matthias, 1992. "Technischer Fortschritt und die Arbeitsteilung zwischen Industrie- und Entwicklungsländern : eine empirische Analyse," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 758, Kiel Institute for the World Economy (IfW).
    2. Marra, Michele & Pannell, David J. & Abadi Ghadim, Amir, 2003. "The economics of risk, uncertainty and learning in the adoption of new agricultural technologies: where are we on the learning curve?," Agricultural Systems, Elsevier, Elsevier, vol. 75(2-3), pages 215-234.
    3. Mills, Bradford F. & Schleich, Joachim, 2010. "Why don't households see the light?: Explaining the diffusion of compact fluorescent lamps," Resource and Energy Economics, Elsevier, Elsevier, vol. 32(3), pages 363-378, August.
    4. Smale, Melinda & Bellon, Mauricio R. & Gomez, Jose Alfonso Aguirre, 1999. "The Private and Public Characteristics of Maize Land Races and the Area Allocation Decisions of Farmers in a Center of Crop Diversity," Economics Working Papers, CIMMYT: International Maize and Wheat Improvement Center 7669, CIMMYT: International Maize and Wheat Improvement Center.
    5. John C. Persons & Vincent A. Warther, . "Boom and Bust Patterns in the Adoption of Financial Innovations," Research in Financial Economics, Ohio State University 9601, Ohio State University.
    6. Francesco Bogliacino & Giorgio Rampa, 2009. "Quality Risk Aversion, Conjectures, and New Product Diffusion," EERI Research Paper Series, Economics and Econometrics Research Institute (EERI), Brussels EERI_RP_2009_27, Economics and Econometrics Research Institute (EERI), Brussels.
    7. David Popp, 2010. "Exploring Links Between Innovation and Diffusion: Adoption of NO X Control Technologies at US Coal-fired Power Plants," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 45(3), pages 319-352, March.
    8. Floridi, Matteo & Bartolini, Fabio & Peerlings, Jack & Polman, Nico & Viaggi, Davide, 2013. "Modelling the adoption of automatic milking systems in Noord-Holland," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), Italian Association of Agricultural and Applied Economics (AIEAA), issue 1, April.
    9. Llewellyn, Rick S. & Lindner, Robert K. & Pannell, David J. & Powles, Stephen B., 2003. "Effective information and the influence of an extension event on perceptions and adoption," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia, Australian Agricultural and Resource Economics Society 57911, Australian Agricultural and Resource Economics Society.
    10. Bogliacino, F & Rampa, G, 2009. "Monopolistic Competition and New Products: A Conjectural Equilibrium Approach," MPRA Paper 15120, University Library of Munich, Germany.
    11. Dimara, Efthalia & Skuras, Dimitrios, 1998. "Adoption of new tobacco varieties in Greece: Impacts of empirical findings on policy design," Agricultural Economics, Blackwell, Blackwell, vol. 19(3), pages 297-307, December.
    12. Pannell, David J., 1999. "Uncertainty and Adoption of Sustainable Farming Systems," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand, Australian Agricultural and Resource Economics Society 124511, Australian Agricultural and Resource Economics Society.
    13. Ghadim, Amir K. Abadi & Pannell, David J., 1999. "A conceptual framework of adoption of an agricultural innovation," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 21(2), October.
    14. Abadi Ghadim, Amir K. & Pannell, David J., 1999. "A conceptual framework of adoption of an agricultural innovation," Agricultural Economics, Blackwell, Blackwell, vol. 21(2), pages 145-154, October.
    15. Javad Torkamani & Shahrokh Shajari, 2008. "Adoption of New Irrigation Technology Under Production Risk," Water Resources Management, Springer, Springer, vol. 22(2), pages 229-237, February.

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