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An option-value approach to technology adoption in U.S. manufacturing: Evidence from microdata

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  • Adela Luque

Abstract

Numerous empirical studies have examined the role of firm and industry heterogeneity in the decision to adopt new technologies using a Net Present Value framework. However, as suggested by the recently developed option-value theory, these studies may have overlooked the role of investment reversibility and uncertainty as important determinants of technology adoption. Using the option-value investment model as my underlying theoretical framework, I examine how these two factors affect the decision to adopt three advanced manufacturing technologies. My results are consistent with the option-value model's prediction that plants operating in industries facing higher investment reversibility and lower degrees of demand and technological uncertainty are more likely to adopt advanced manufacturing technologies.

Suggested Citation

  • Adela Luque, 2002. "An option-value approach to technology adoption in U.S. manufacturing: Evidence from microdata," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(6), pages 543-568.
  • Handle: RePEc:taf:ecinnt:v:11:y:2002:i:6:p:543-568
    DOI: 10.1080/10438590214337
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    References listed on IDEAS

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    Cited by:

    1. Moretto, Michele, 2008. "Competition and irreversible investments under uncertainty," Information Economics and Policy, Elsevier, vol. 20(1), pages 75-88, March.
    2. Gómez, Jaime & Vargas, Pilar, 2012. "Intangible resources and technology adoption in manufacturing firms," Research Policy, Elsevier, vol. 41(9), pages 1607-1619.

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