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Technology adoption: Hysteresis and absence of lock-in

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  • Colla, Paolo
  • Garcia, Filomena

Abstract

We introduce a simple model of technology adoption with overlapping generations of players. Technologies generate network effects, and players are both backward- and forward-looking. We use results from the supermodular games literature to guarantee equilibrium existence and uniqueness. In line with the empirical literature, the equilibrium adoption path exhibits hysteresis and technologies cannot lock-in. We characterize the expected time of adoption, which can be seen as a measure of technology dominance.

Suggested Citation

  • Colla, Paolo & Garcia, Filomena, 2016. "Technology adoption: Hysteresis and absence of lock-in," Economics Letters, Elsevier, vol. 141(C), pages 107-111.
  • Handle: RePEc:eee:ecolet:v:141:y:2016:i:c:p:107-111
    DOI: 10.1016/j.econlet.2015.12.017
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    References listed on IDEAS

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    More about this item

    Keywords

    Path dependence; Supermodular games; Overlapping generations; Stochastic technology values;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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