Herd behaviour as an incentive scheme
AbstractWe consider a set-up in which firms sequentially adopt a technology. The technology is a public good. Late movers, upon observing the early movers adopting the old technology, (partly) infer that the new technology does not exist. This hampers their incentives to innovate. Early movers anticipate this and rather exert effort to try to invent the new technology. Hence, in our model herding reduces free-rider problems and may - in the presence of switching costs - even increase efficiency. Copyright Springer-Verlag Berlin/Heidelberg 2005
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 26 (2005)
Issue (Month): 3 (October)
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Other versions of this item:
- Nicolas Melissas, 2000. "Herd Behaviour as an Incentive Scheme," Econometric Society World Congress 2000 Contributed Papers 0425, Econometric Society.
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- VERGARI, Cecilia, 2004. "Herd behaviour, strategic complementarities and technology adoption," CORE Discussion Papers 2004063, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Andonova, Veneta & Rodriguez, Yeny & Sanchez, Ivan Dario, 2013. "When waiting is strategic: Evidence from Colombian M&As 1995–2008," Journal of Business Research, Elsevier, vol. 66(10), pages 1736-1742.
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