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Rank, Stock, Order, and Epidemic Effects in the Diffusion of New Process Technologies: An Empirical Model

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  • Massoud Karshenas
  • Paul L. Stoneman

Abstract

In this article we construct a general duration model of technology adoption that incorporates the main factors discussed in different theories of diffusion of new process technologies. The model is applied to data on diffusion of CNC in the UK engineering industry. Although we find strong evidence in support of rank and endogenous learning effects, there seems to be little evidence in support of the stock and order effects. The main factors affecting the diffusion of CNC are found to be endogenous learning, firm size, industry growth rates, the cost of the technology, and expected changes in the cost of the technology.

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  • 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.
  • Handle: RePEc:rje:randje:v:24:y:1993:i:winter:p:503-528
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    References listed on IDEAS

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    1. Timothy H. Hannan & John M. McDowell, 1984. "The Determinants of Technology Adoption: The Case of the Banking Firm," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 328-335, Autumn.
    2. Norman J. IRELAND & Paul L. STONEMAN, 1985. "Order Effects, Perfect Foresight and Intertemporal Price Discrimination," Discussion Papers (REL - Recherches Economiques de Louvain) 1985012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Lancaster, Tony, 1985. "Generalised residuals and heterogeneous duration models : With applications to the Weilbull model," Journal of Econometrics, Elsevier, vol. 28(1), pages 155-169, April.
    4. Jennifer F. Reinganum, 1981. "Market Structure and the Diffusion of New Technology," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 618-624, Autumn.
    5. Karshenas, Massoud & Stoneman, Paul, 1990. "The Role of Exogenous and Endogenous Learning and Economic Factors in the diffusion of New Technology: An Epidemic Based Study of the Spread of Colour Television Ownership in the UK," Economic Research Papers 268391, University of Warwick - Department of Economics.
    6. Ireland, N & Stoneman, P, 1986. "Technological Diffusion, Expectations and Welfare," Oxford Economic Papers, Oxford University Press, vol. 38(2), pages 283-304, July.
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    8. Heckman, James J. & Singer, Burton, 1984. "Econometric duration analysis," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 63-132.
    9. 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.
    10. Drew Fudenberg & Jean Tirole, 1985. "Preemption and Rent Equalization in the Adoption of New Technology," Review of Economic Studies, Oxford University Press, vol. 52(3), pages 383-401.
    11. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    12. Hannan, Timothy H & McDowell, John M, 1987. "Rival Precedence and the Dynamics of Technology Adoption: An Empirical Analysis," Economica, London School of Economics and Political Science, vol. 54(214), pages 155-171, May.
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