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The Impact of Competition on Technology Adoption: An Apples-to-PCs Analysis

Author

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  • Adam Hale Shapiro

    (Bureau of Economic Analysis)

  • Adam Copeland

    (Federal Reserve Bank of New York)

Abstract

We study the effect of market structure on a firm's decision to adopt a new technology in the personal computer industry. This industry is unusual because there exists two horizontally segmented retail markets with different degrees of competition: the IBM compatible (or ``PC") platform and the Apple platform. We first document that relative to Apple, producers of PCs have more frequent technology adoption, shorter product cycles, and steeper price declines over the product cycle. We then develop a parsimonious vintage-capital model which is able to match the different stylized facts of PC and Apple producers. The model predicts that competition is the key driver of the rate at which technology is adopted.

Suggested Citation

  • Adam Hale Shapiro & Adam Copeland, 2010. "The Impact of Competition on Technology Adoption: An Apples-to-PCs Analysis," 2010 Meeting Papers 181, Society for Economic Dynamics.
    • Handle: RePEc:red:sed010:181
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    References listed on IDEAS

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    Cited by:

    1. Slivko, Olga, 2012. "Direct and indirect subsidies in markets with system goods in the presence of externalities. Preliminary version," Working Papers 2072/211631, Universitat Rovira i Virgili, Department of Economics.
    2. Sukanto Bhattacharya & Surjasama Lahiri & Munirul Nabin, 2021. "A novel technology adoption in an OLG framework: examining the cross-generational effects of promotional policies," SN Business & Economics, Springer, vol. 1(4), pages 1-17, April.
    3. Rui Castro & Gian Luca Clementi & Yoonsoo Lee, 2015. "Cross Sectoral Variation in the Volatility of Plant Level Idiosyncratic Shocks," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 1-29, March.
    4. Mykolas Simas Poškus & Lina Jovarauskaitė & Audra Balundė, 2021. "A Systematic Review of Drivers of Sustainable Wastewater Treatment Technology Adoption," Sustainability, MDPI, vol. 13(15), pages 1-11, July.
    5. Adam Hale Shapiro & Ana Aizcorbe, 2010. "Implications of Consumer Heterogeneity on Price Measures for Technology Goods," BEA Working Papers 0062, Bureau of Economic Analysis.
    6. Dae-Hwan Kim & Matarr O. Sambou & Moo-Sup Jung, 2016. "Does Technology Transfer Help Small and Medium Companies? Empirical Evidence from Korea," Sustainability, MDPI, vol. 8(11), pages 1-13, November.

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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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