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On the Joint Decisions of R&D and Technology Adoption

Author

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  • Tom K. Lee

    (Department of Economics D-008, University of California, San Diego, La Jolla, California 92093)

Abstract

This paper attempts to bridge the gap between R&D models that do not consider technology adoption decisions and technology adoption models that do not consider R&D decisions. It develops and analyzes a decision-theoretic model on the joint decisions of R&D and technology adoption of a firm. Two interesting comparative statics results are obtained. First, an increase in the cost of R&D reduces the incentive for a firm to do R&D. Secondly, an increase in the cost of technology adoption or an increase in the market interest rate reduces the incentive for a firm to adopt new technology and also reduces the incentive for a firm to do R&D. Under certain conditions, an increase in the cost of R&D increases the incentive for a firm to adopt new technology.

Suggested Citation

  • Tom K. Lee, 1985. "On the Joint Decisions of R&D and Technology Adoption," Management Science, INFORMS, vol. 31(8), pages 959-969, August.
    • Handle: RePEc:inm:ormnsc:v:31:y:1985:i:8:p:959-969
    DOI: 10.1287/mnsc.31.8.959
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    Cited by:

    1. Gray, Richard S. & Malla, Stavroula & Tran, Kien C., 2003. "An Empirical Analysis Of Public And Private Spillovers Within The Canola Biotech Industry," 2003 Annual meeting, July 27-30, Montreal, Canada 22137, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Gray, Richard & Malla, Stavroula, 2007. "Research Spillovers What They Are and Why They Matter for Policy," CAIRN Policy Briefs 273075, Canadian Agricultural Innovation and Regulation Network (CAIRN).
    3. Gray, Richard S. & Malla, Stavroula & Tran, Kien C., 2005. "Pecuniary, Non-Pecuniary, and Downstream Research Spillovers: The Case of Canola," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24776, European Association of Agricultural Economists.
    4. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, vol. 50(2), pages 133-144, February.
    5. Aditya Vedantam & Ananth Iyer, 2021. "Capacity Investment under Bayesian Information Updates at Reporting Periods: Model and Application," Production and Operations Management, Production and Operations Management Society, vol. 30(8), pages 2707-2725, August.

    More about this item

    Keywords

    research and development; economics;

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