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A model of the linked adoption of complementary technologies

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  • Margaret Smith

Abstract

This paper presents a dynamic feedback model of the technology diffusion process in which each firm's technology adoption decisions maximize the net present value of its anticipated cash flow, taking into account the direct cost savings, the number of linked firms expected to adopt complementary technologies, and anticipated changes in adoption costs. The adoption of complementary technologies need not be simultaneous, but linked technologies can induce a rapid industrial regime shift without explicit coordination or planning.

Suggested Citation

  • Margaret Smith, 2004. "A model of the linked adoption of complementary technologies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(1), pages 91-99.
  • Handle: RePEc:taf:ecinnt:v:13:y:2004:i:1:p:91-99
    DOI: 10.1080/1043859042000156057
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    References listed on IDEAS

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    1. Milgrom, Paul & Roberts, John, 1995. "The Economics of Modern Manufacturing: Reply," American Economic Review, American Economic Association, vol. 85(4), pages 997-999, September.
    2. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April.
    3. 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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    Cited by:

    1. Cristiano Antonelli, 2006. "Diffusion as a Process of Creative Adoption," The Journal of Technology Transfer, Springer, vol. 31(2), pages 211-226, March.

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