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The Role of Technological and Industrial Heterogeneity In Technology Diffusion: a Markovian Approach

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  • Adela Luque
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    Abstract

    Recent empirical studies have established the importance of intra and inter-industry heterogeneity in investment in innovation and other outcomes. This paper examines the role of industry and technology heterogeneity in the diffusion of advanced manufacturing technologies from a simple Markovian approach. Using the Maximum Entropy estimator, I estimate transition probabilities and corresponding half-lives, look for outliers in technology and industry diffusion patterns, and try to find explanations of their unusual behavior in idiosyncratic technology and industry characteristics. A consistent industry-level pattern that emerged is one that relates consumer demand and production processes. It seems that in industries where hand-made products are a sign of quality to the customer, technology spreads very slowly. On the other hand, in industries where demand for sophisticated, high-precision goods is high or in industries where demand-driven product specifications vary quite rapidly over relatively short periods of time, advanced technologies diffuse much more rapidly.

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    Bibliographic Info

    Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 03-07.

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    Date of creation: Feb 2003
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    Handle: RePEc:cen:wpaper:03-07

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    Keywords: CES; economic; research; micro; data; microdata; chief; economist;

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    1. Pindyck, Robert S., 1990. "Irreversibility, uncertainty, and investment," Working papers 3137-90., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    2. Fudenberg, Drew & Tirole, Jean, 1985. "Preemption and Rent Equilization in the Adoption of New Technology," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 383-401, July.
    3. Farzin, Y.H. & Huisman, K.J.M. & Kort, P.M., 1998. "Optimal timing of technology adoption," Open Access publications from Tilburg University urn:nbn:nl:ui:12-74049, Tilburg University.
    4. Cukierman, Alex, 1980. "The Effects of Uncertainty on Investment under Risk Neutrality with Endogenous Information," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 462-75, June.
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    6. Berndt, Ernst R. & Morrison, Catherine J. & Rosenblum, Larry S., 1992. "High-tech capital formation and labor composition in U.S. manufacturing industries : an exploratory analysis," Working papers 3414-92., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    7. Steve J. Davis & John Haltiwanger, 1991. "Wage Dispersion Between and Within U.S. Manufacturing Plants, 1963-1986," NBER Working Papers 3722, National Bureau of Economic Research, Inc.
    8. Stoneman, P, 1981. "Intra-Firm Diffusion, Bayesian Learning and Profitability," Economic Journal, Royal Economic Society, vol. 91(362), pages 375-88, June.
    9. Rosenberg, Nathan, 1976. "On Technological Expectations," Economic Journal, Royal Economic Society, vol. 86(343), pages 523-35, September.
    10. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 253-90, February.
    11. Weiss, Allen M, 1994. "The Effects of Expectations on Technology Adoption: Some Empirical Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 42(4), pages 341-60, December.
    12. Reinganum, Jennifer F., . "Market Structure and the Diffusion of New Technology," Working Papers 360, California Institute of Technology, Division of the Humanities and Social Sciences.
    13. Avinash Dixit, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-132, Winter.
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