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Sequential technology adoption with asymmetric firms

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  • Arghya Ghosh
  • Munirul Nabin Haque

Abstract

We analyse the incentives and welfare implications of costly technology adoption in a two-period duopoly model where firms have different amounts of capital. We also extend our framework to an open economy set-up and examine the relationship between trade and technology adoption. Our findings are as follows. First, no monotone relationship exists between the threshold cost of adoption and capital shares. Second, an unequal distribution of capital, despite lessening competition, can increase total surplus. Third, trade generally encourages adoption of modern technology unless the share of capital for the adopters is too low.

Suggested Citation

  • Arghya Ghosh & Munirul Nabin Haque, 2006. "Sequential technology adoption with asymmetric firms," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(2), pages 157-172.
    • Handle: RePEc:taf:jitecd:v:15:y:2006:i:2:p:157-172
    DOI: 10.1080/09638190600690838
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    References listed on IDEAS

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