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Networks, Options and Preemption

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  • Mason, R.
  • Weeds, H.

Abstract

This paper examines the irreversible adoption of a technology whose returns are uncertain, when there is an advantage to being the first adopter, but a network advantage to adopting when others also do so. Two patterns of adoption emerge: sequential, in which the leader aggressively preempts its rival; and a more accommodating outcome in which the firms adopt simultaneously.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp575.pdf
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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 575.

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Length: 37 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:wrk:warwec:575

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Keywords: TECHNOLOGY ; NETWORK ANALYSIS ; EFFICIENCY;

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References

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Citations

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Cited by:
  1. Kort, P.M. & Pawlina, G., 2003. "Strategic capital budgeting: Asset replacement under uncertainty," Open Access publications from Tilburg University urn:nbn:nl:ui:12-123062, Tilburg University.
  2. Lambrecht, Bart & Perraudin, William, 2003. "Real options and preemption under incomplete information," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 27(4), pages 619-643, February.
  3. Pawlina, G. & Kort, P.M., 2001. "Real Options in an Aymmetric Duopoly: Who Benefits from your Competitive Disadvantage," Discussion Paper, Tilburg University, Center for Economic Research 2001-95, Tilburg University, Center for Economic Research.
  4. Tyrone Lin, 2010. "Assessment of decision-making regarding market entry/exit for technology innovation," Quality & Quantity: International Journal of Methodology, Springer, Springer, vol. 44(3), pages 447-457, April.
  5. Tzavara, Dionisia & Paul Levine & Neil Rickman, 2002. "Market entry and roll-out with product differentiation," Royal Economic Society Annual Conference 2002, Royal Economic Society 176, Royal Economic Society.
  6. Flavia Cortelezzi & Giovanni Villani, 2007. "Strategic Technology Adoption and Market Dynamics as Option Games," Quaderni DSEMS, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia 14-2007, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.

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