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The Timing of New Technology Adoption: The Case of MRI

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  • Philipp Schmidt-Dengler

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    (London School of Economics public)

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    Abstract

    This paper studies the adoption of nuclear magnetic resonance imaging (MRI) by US hospitals. I consider a timing game of new technology adoption. The dynamic game allows me to take both timing decisions and strategic interaction into account. The model can be solved using standard dynamic programming techniques. Using a panel data set of US hospitals, cross sectional variation in adoption times, market structure and demand is exploited to recover the profit and cost parameters of the timing game. In counterfactual experiments I decompose the cost of competition into a business stealing and a preemption effect. I find substantial changes in adoption times and industry payoffs due to competition. These changes are mostly due to a business stealing effect. Preemption accounts for a significant but small share of this change

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    Bibliographic Info

    Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 3.

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    Date of creation: 03 Dec 2006
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    Handle: RePEc:red:sed006:3

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    Related research

    Keywords: Technology Adoption; Preemption; Dynamic Oligopoly;

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    Cited by:
    1. Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.
    2. Shiko Maruyama, 2010. "Estimation of Finite Sequential Games," Discussion Papers 2010-22, School of Economics, The University of New South Wales.
    3. Wang, Yafeng & Graham, Brett, 2009. "Generalized Maximum Entropy estimation of discrete sequential move games of perfect information," MPRA Paper 21331, University Library of Munich, Germany.
    4. Catherine Tucker & Amalia Miller, 2007. "Privacy Protection and Technology Diffusion: The Case of Electronic Medical Records," Working Papers 07-16, NET Institute, revised Sep 2007.
    5. Shiko Maruyama & Meliyanni Johar, 2013. "Do Siblings Free-Ride in "Being There" for Parents?," Discussion Papers 2013-06, School of Economics, The University of New South Wales.
    6. Wang, Yafeng & Graham, Brett, 2010. "Simulation Based Estimation of Discrete Sequential Move Games of Perfect Information," MPRA Paper 23153, University Library of Munich, Germany.
    7. Carlos Daniel Santos, 2009. "Recovering the sunk costs of R&D: the moulds industry case," LSE Research Online Documents on Economics 28689, London School of Economics and Political Science, LSE Library.

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