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Sunk Costs and the Depth and Probability of Technology Adoption

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  • Thomas Astebro

Abstract

I propose that sunk costs of learning and the output over which these costs are spread determine the probability and depth of technology adoption. Depth of adoption describes the extent to which firms exploit the advantages of the technology. I find that plant size but not firm size predicts CAD and CNC adoption. Learning costs are lumpy, are closely connected to technology adoption and determine both the probability and depth of adoption. Depth of adoption is considerably more plant idiosyncratic than the decision to adopt. Copyright Blackwell Publishing Ltd. 2004.

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  • Thomas Astebro, 2004. "Sunk Costs and the Depth and Probability of Technology Adoption," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 381-399, September.
  • Handle: RePEc:bla:jindec:v:52:y:2004:i:3:p:381-399
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    1. Klaus Rennings & Peter Markewitz & Stefan Vögele, 2013. "How clean is clean? Incremental versus radical technological change in coal-fired power plants," Journal of Evolutionary Economics, Springer, vol. 23(2), pages 331-355, April.
    2. Beck, Jonathan & Grajek, Michal & Wey, Christian, 2005. "Hypermarket Competition and the Diffusion of Retail Checkout Barcode Scanning," CEPR Discussion Papers 5386, C.E.P.R. Discussion Papers.
    3. Giuliana Battisti & Heinz Hollenstein & Paul Stoneman & Martin Woerter, 2007. "Inter And Intra Firm Diffusion Of Ict In The United Kingdom (Uk) And Switzerland (Ch) An Internationally Comparative Study Based On Firm-Level Data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(8), pages 669-687.
    4. Danielle Galliano & Pascale Roux, 2008. "Organisational motives and spatial effects in Internet adoption and intensity of use: evidence from French industrial firms," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(2), pages 425-448, June.
    5. Stoneman, Paul & Battisti, Giuliana, 2010. "The Diffusion of New Technology," Handbook of the Economics of Innovation, Elsevier.
    6. repec:ipg:wpaper:2014-587 is not listed on IDEAS
    7. Anja Lambrecht & Katja Seim, 2006. "Adoption and Usage of Online Services in the Presence of Complementary Offline Services: Retail Banking," Working Papers 06-27, NET Institute, revised Oct 2006.
    8. Andreas Asseyer, 2015. "Optimal monitoring in dynamic procurement contracts," Working Papers 2015002, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    9. Danielle Galliano & Luis Orozco, 2013. "New Technologies and Firm Organization: The Case of Electronic Traceability Systems in French Agribusiness," Industry and Innovation, Taylor & Francis Journals, vol. 20(1), pages 22-47, January.
    10. Gomez, Jaime & Vargas, Pilar, 2009. "The effect of financial constraints, absorptive capacity and complementarities on the adoption of multiple process technologies," Research Policy, Elsevier, vol. 38(1), pages 106-119, February.
    11. Jonathan Beck & Michal Grajek & Christian Wey, 2011. "Estimating level effects in diffusion of a new technology: barcode scanning at the checkout counter," Applied Economics, Taylor & Francis Journals, vol. 43(14), pages 1737-1748.
    12. Galliano, D. & Roux, P., 2005. "The evolution of the spatial digital divide : from internet adoption to internet use by french industrial firms," Economics Working Paper Archive (Toulouse) 200513, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse).
    13. Fuentelsaz, Lucio & Gómez, Jaime & Palomas, Sergio, 2016. "Interdependences in the intrafirm diffusion of technological innovations: Confronting the rational and social accounts of diffusion," Research Policy, Elsevier, vol. 45(5), pages 951-963.
    14. Hollenstein, Heinz & Woerter, Martin, 2008. "Inter- and intra-firm diffusion of technology: The example of E-commerce: An analysis based on Swiss firm-level data," Research Policy, Elsevier, vol. 37(3), pages 545-564, April.
    15. Pilar Beneito & María E. Rochina-Barrachina & Amparo Sanchis, 2013. "Ownership and cyclicality of firms’ R&D investment," Working Papers 1306, Department of Applied Economics II, Universidad de Valencia.
    16. Tobias Kretschmer, 2005. "Competing technologies in the database management systems market," Working Papers 05-17, NET Institute, revised Oct 2005.
    17. Adel Ben Youssef & Walid Hadhri & Hatem M’henni, 2010. "Intra-Firm Diffusion of Innovation: Evidence from Tunisian SME’s in Matters of Information and Communication Technologies," Working Papers 532, Economic Research Forum, revised 07 Jan 2010.
    18. Adelheid Holl & Rafael Pardo & Ruth Rama, 2013. "Spatial patterns of adoption of just-in-time manufacturing," Papers in Regional Science, Wiley Blackwell, vol. 92(1), pages 51-67, March.
    19. Adel Ben Youssef & David Castillo Merino & Walid Hadhri, 2012. "Determinants of Intra-firm Diffusion Process of ICT: Theoretical Sources and Empirical Evidence from Catalan Firms," Post-Print halshs-00937176, HAL.
    20. Anissa Chaibi & Adel Ben Youssef & Leila Peltier-Ben Aoun, 2015. "E-Skills, Brains And Performance Of The Firms: ICT And Ability Of Firms To Conduct Successful Projects In Luxembourg," Post-Print halshs-01068225, HAL.
    21. Arora, Ashish & Forman, Chris & Yoon, Ji Woong, 2010. "Complementarity and information technology adoption: Local area networks and the Internet," Information Economics and Policy, Elsevier, vol. 22(3), pages 228-242, July.
    22. Greenstein, Shane, 2010. "Innovative Conduct in Computing and Internet Markets," Handbook of the Economics of Innovation, Elsevier.
    23. Goldfarb, Avi & Prince, Jeff, 2008. "Internet adoption and usage patterns are different: Implications for the digital divide," Information Economics and Policy, Elsevier, vol. 20(1), pages 2-15, March.
    24. Fuentelsaz, Lucio & Gómez, Jaime & Palomas, Sergio, 2009. "The effects of new technologies on productivity: An intrafirm diffusion-based assessment," Research Policy, Elsevier, vol. 38(7), pages 1172-1180, September.

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