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The Timing of New Technology Adoption: The Case of MRI


  • Philipp Schmidt-Dengler

    () (London School of Economics public)


This paper studies the adoption of nuclear magnetic resonance imaging (MRI) by US hospitals. I consider a timing game of new technology adoption. The dynamic game allows me to take both timing decisions and strategic interaction into account. The model can be solved using standard dynamic programming techniques. Using a panel data set of US hospitals, cross sectional variation in adoption times, market structure and demand is exploited to recover the profit and cost parameters of the timing game. In counterfactual experiments I decompose the cost of competition into a business stealing and a preemption effect. I find substantial changes in adoption times and industry payoffs due to competition. These changes are mostly due to a business stealing effect. Preemption accounts for a significant but small share of this change

Suggested Citation

  • Philipp Schmidt-Dengler, 2006. "The Timing of New Technology Adoption: The Case of MRI," 2006 Meeting Papers 3, Society for Economic Dynamics.
  • Handle: RePEc:red:sed006:3

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    Cited by:

    1. repec:aea:aejmic:v:10:y:2018:i:1:p:67-101 is not listed on IDEAS
    2. Giulia Pavan & Andrea Pozzi & Gabriele Rovigatti, 2017. "Strategic Entry and Potential Competition - Evidence from Compressed Gas Fuel Retail," EIEF Working Papers Series 1709, Einaudi Institute for Economics and Finance (EIEF), revised Jun 2017.
    3. Robert Clark & Jason Allen & Jean-Francois Houde, 2008. "Market Structure and the diffusion of electronic banking," 2008 Meeting Papers 1015, Society for Economic Dynamics.

    More about this item


    Technology Adoption; Preemption; Dynamic Oligopoly;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights


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