The speed of technological adoption under price competition: two-tier vs. one-tier industries
AbstractThe present paper examines the firms' incentives to adopt a new cost reducing technology in vertically related markets, as well as, the effects of the vertical relations on the firms' timing of adoption. It demonstrates that in vertically related industries, independently of the upstream market structure (either upstream separate firms or upstream monopoly), downstream firms always have strong incentives to adopt the new technology, while in equilibrium there is technology diffusion. Further, comparing the speed of the firms' technology adoption in one-tier and two-tier industries, we show that, independently of the upstream market structure, technology adoption may occurs earlier in two-tier than in one-tier industries depending on the intensity of the final market competition, the drasticity of the new technology and the bargaining power distribution in the market.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 1307.
Length: 46 pages
Date of creation: 01 Dec 2012
Date of revision: 08 May 2013
Technology adoption; Vertical relations; Two-part tariffs; Product Differentiation;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-22 (All new papers)
- NEP-COM-2013-05-22 (Industrial Competition)
- NEP-CWA-2013-05-22 (Central & Western Asia)
- NEP-INO-2013-05-22 (Innovation)
- NEP-TID-2013-05-22 (Technology & Industrial Dynamics)
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