IDEAS home Printed from https://ideas.repec.org/a/rje/randje/v17y1986ispringp33-47.html
   My bibliography  Save this article

The Diffusion of New Technology and the Market for an Innovation

Author

Listed:
  • Herman C. Quirmbach

Abstract

This article shows that the diffusion of a capital-embodied process innovation results from a pattern of decreasing incremental benefits and adoption costs for later adoptions. Strategic behavior is inessential to this finding. We develop a method for comparing diffusion rates for different market structures in the capital equipment market. We consider cases with market power on the seller's side of the market and on the buyers' side of the market, a case with no market power, and the welfare-optimal case. We find that a joint venture adopts an innovation more slowly than other market regimes to protect existing capital investments and that the adoption rate is slower than is socially optimal. A monopoly supplier, on the other hand, adopts at a rate faster than is socially optimal. This result is usually also the case when there is no market power. Finally, we show that the monopoly supplier accelerates adoptions faster than in the case where there is no market power, but retards later adoptions. Market power thus makes a difference in diffusion rates, and on which side of the market that power lies makes a considerable difference.

Suggested Citation

  • Herman C. Quirmbach, 1986. "The Diffusion of New Technology and the Market for an Innovation," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 33-47, Spring.
  • Handle: RePEc:rje:randje:v:17:y:1986:i:spring:p:33-47
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0741-6261%28198621%2917%3A1%3C33%3ATDONTA%3E2.0.CO%3B2-D&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stoneman, Paul & Battisti, Giuliana, 2010. "The Diffusion of New Technology," Handbook of the Economics of Innovation, Elsevier.
    2. Ariel Herbert FAMBEU, 2016. "Déterminants De L’Adoption Des Tic Dans Un Pays En Développement : Une Analyse Économétrique Sur Les Entreprises Industrielles Au Cameroun," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 43, pages 159-186.
    3. Stoneman, Paul, 2011. "Soft Innovation: Economics, Product Aesthetics, and the Creative Industries," OUP Catalogue, Oxford University Press, number 9780199697021.
    4. Alberto Galasso & Mihkel Tombak, 2014. "Switching to Green: The Timing of Socially Responsible Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 669-691, September.
    5. J. G. Smythe, 2002. "Reputation, public information, and physician adoption of an innovation," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 3(2), pages 103-110, June.
    6. A. Mahathi & Rupayan Pal & Vinay Ramani, 2016. "Competition, strategic delegation and delay in technology adoption," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(2), pages 143-171, March.
    7. Petrakis, Emmanuel, 1994. "Technology diffusion in a differentiated industry," UC3M Working papers. Economics 2921, Universidad Carlos III de Madrid. Departamento de Economía.
    8. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2015. "On vertical relations and the timing of technology adoption," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 117-129.
    9. Massoud Karshenas & Paul L. Stoneman, 1993. "Rank, Stock, Order, and Epidemic Effects in the Diffusion of New Process Technologies: An Empirical Model," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 503-528, Winter.
    10. repec:bin:bpeajo:v:26:y:1995:i:1995-3:p:1-65 is not listed on IDEAS
    11. Rachel Bocquet & Olivier Brossard, 2008. "Information technologies adoption and localized knowledge diffusion : an empirical study
      [Adoption des tic, proximité et diffusion localisée des connaissances]
      ," Post-Print hal-01293648, HAL.
    12. Arjunan, Subramanian & Moir, Christopher & Kirwan, Kerry & Pink, David, 2010. "Thegreening Of ‘Green’ Technology: Adoption Of Bio-Plastic Pla," 14th ICABR Conference, June 16-18, 2010, Ravello, Italy 187976, International Consortium on Applied Bioeconomy Research (ICABR).
    13. Dinlersoz, Emin M. & Pereira, Pedro, 2007. "On the diffusion of electronic commerce," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 541-574, June.
    14. Petrakis, Emmanuel, 1998. "Diffusion of abatement technologies in a differentiated industry," DEE - Working Papers. Business Economics. WB 6542, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rje:randje:v:17:y:1986:i:spring:p:33-47. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://www.rje.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.