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Regulation and Preemptive Technology Adoption


  • Michael H. Riordan


Two rival firms must decide if and when to adopt a new technology, knowing how adoption costs decline over time and how profit flows vary with adoption patterns. In many cases, price and entry regulations beneficially slow technology adoption by making preemption strategies less attractive. In some cases, these regulations can so discourage a firm from preemption as to change the order in which firms adopt new technologies, speeding one firm's adoption date and slowing the other's. In the context of a particular scenario for cable and telephone companies' adoption of new fiber optic technologies, the case for lifting the "cross-ownership ban" depends on the extent to which telephone companies are able to implement a superior technology. Reregulation of cable companies strengthens this case.

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  • Michael H. Riordan, 1992. "Regulation and Preemptive Technology Adoption," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 334-349, Autumn.
  • Handle: RePEc:rje:randje:v:23:y:1992:i:autumn:p:334-349

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    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    2. A. Mitchell Polinsky & Yeon-Koo Che, 1991. "Decoupling Liability: Optimal Incentives for Care and Litigation," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 562-570, Winter.
    3. Katz, Avery, 1987. "Measuring the Demand for Litigation: Is the English Rule Really Cheaper?," Journal of Law, Economics, and Organization, Oxford University Press, vol. 3(2), pages 143-176, Fall.
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