IDEAS home Printed from https://ideas.repec.org/p/clt/sswopa/407.html
   My bibliography  Save this paper

Technology Adoption Under Imperfect Information

Author

Listed:
  • Reinganum, Jennifer F.

Abstract

This article presents a static game theoretic model of a firm's decision to adopt a technological innovation of uncertain profitability. Given the levels of adoption costs, discount rates, and expectations regarding the profitability of the innovation, we determine the (Nash equilibrium) range of initial production costs for which each firm prefers to adopt the innovation. We show that if initial costs are sufficiently dissimilar, then it is the high-cost firm which adopts the new technology, while the low-cost firm eschews adoption. An increase in a firm's adoption cost (or equivalently, a decrease in the firm's discount rate) makes that firm no more likely to adopt the new technology, while the rival firm may be more or less likely to adopt, depending upon the initial values of the parameters.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Reinganum, Jennifer F., 1981. "Technology Adoption Under Imperfect Information," Working Papers 407, California Institute of Technology, Division of the Humanities and Social Sciences.
    • Handle: RePEc:clt:sswopa:407
    as

    Download full text from publisher

    File URL: http://www.hss.caltech.edu/SSPapers/wp-old.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bernstein, Fernando & Federgruen, Awi, 2004. "Comparative statics, strategic complements and substitutes in oligopolies," Journal of Mathematical Economics, Elsevier, vol. 40(6), pages 713-746, September.
    2. Amihai Glazer, 2008. "Bargaining with Rent Seekers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 859-871, October.
    3. Maria Alipranti & Emmanuel Petrakis, 2013. "The Speed of Technological Adoption Under Price Competition: Two-Tier Vs One-Tier Industries," Working Papers 1307, University of Crete, Department of Economics.
    4. Milliou, Chrysovalantou & Petrakis, Emmanuel, 2011. "Timing of technology adoption and product market competition," International Journal of Industrial Organization, Elsevier, vol. 29(5), pages 513-523, September.
    5. repec:cte:werepe:2921 is not listed on IDEAS
    6. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2015. "On vertical relations and the timing of technology adoption," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 117-129.
    7. Arghya Ghosh & Souresh Saha, 2008. "Trade Policy in the Presence of Technology Licensing," Review of International Economics, Wiley Blackwell, vol. 16(1), pages 45-68, February.
    8. Oksana Loginova & X. Hnery Wang, 2010. "Customization in an Endogenous-Timing Game with Vertical Differentiation," Working Papers 1008, Department of Economics, University of Missouri.
    9. James G. Mulligan & Nilotpal Das, 2006. "Item Pricing Laws, Supplier Behavior, and the Diffusion of Time-Saving Technology Innovations," Working Papers 06-11, University of Delaware, Department of Economics.
    10. Sirio Aramonte, 2015. "Innovation, investor sentiment, and firm-level experimentation," Finance and Economics Discussion Series 2015-67, Board of Governors of the Federal Reserve System (U.S.).
    11. Afuah, Allan, 2004. "Does a focal firm's technology entry timing depend on the impact of the technology on co-opetitors?," Research Policy, Elsevier, vol. 33(8), pages 1231-1246, October.
    12. Pagura, Maria E., 2002. "The Hazard Of Client Exit In Microfinance," 2002 Annual meeting, July 28-31, Long Beach, CA 19698, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. James G. Mulligan & Nilotpal Das, 2004. "Vintage Effects and the Diffusion of Time-Saving Technological Innovations: The Adoption of Optical Scanners by U.S. Supermarkets."," Working Papers 04-06, University of Delaware, Department of Economics.
    14. Maria Alipranti & Emmanuel Petrakis, 2022. "Upstream market structure and the timing of technology adoption," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1298-1310, July.
    15. Miller, David A., 2008. "Invention under uncertainty and the threat of ex post entry," European Economic Review, Elsevier, vol. 52(3), pages 387-412, April.
    16. Bocquet, Rachel & Brossard, Olivier & Sabatier, Mareva, 2007. "Complementarities in organizational design and the diffusion of information technologies: An empirical analysis," Research Policy, Elsevier, vol. 36(3), pages 367-386, April.
    17. Loginova, Oksana & Wang, X. Henry, 2013. "Mass customization in an endogenous-timing game with vertical differentiation," Economic Modelling, Elsevier, vol. 33(C), pages 164-173.
    18. Galang, Roberto Martin N., 2014. "Divergent diffusion: Understanding the interaction between institutions, firms, networks and knowledge in the international adoption of technology," Journal of World Business, Elsevier, vol. 49(4), pages 512-521.
    19. Maria Alipranti & Chrysovalantou Miliou & Emmanuel Petrakis, 2014. "On Vertical Relations and Technology Adoption Timing," Working Papers 1502, University of Crete, Department of Economics.
    20. Kim, Bongsun & Kim, Eonsoo & Miller, Douglas J. & Mahoney, Joseph T., 2016. "The impact of the timing of patents on innovation performance," Research Policy, Elsevier, vol. 45(4), pages 914-928.
    21. Das Nilotpal & Falaris Evangelos M & Mulligan James G, 2009. "Vintage Effects and the Diffusion of Time-Saving Technological Innovations," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-37, June.
    22. Amini, Hamed & Deguest, Romain & Iyidogan, Engin & Minca, Andreea, 2024. "Blockchain adoption and optimal reinsurance design," European Journal of Operational Research, Elsevier, vol. 318(1), pages 341-353.
    23. repec:cte:wbrepe:6542 is not listed on IDEAS
    24. James G. Mulligan & Nilotpal Das, 2005. "Persistent Adoption of Time-Saving Process Innovations," Working Papers 05-03, University of Delaware, Department of Economics.
    25. Sirio Aramonte & Matthew Carl, 2021. "Firm-level R&D after periods of intense technological innovation: the role of investor sentiment," BIS Working Papers 916, Bank for International Settlements.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:clt:sswopa:407. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victoria Mason (email available below). General contact details of provider: http://www.hss.caltech.edu/ss .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.