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Technology Adoption under Asymmetric Market Structure

Author

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  • Benoit Voudon

    (Department of Economics, Trinity College Dublin)

Abstract

This paper examines the impact of vertical integration on the timing of adoption of a cost-reducing technology. Combining the technology adoption and vertical relations literatures in a simple duopoly model, I compare the technology adoption patterns under different vertical structures. In particular, the study of the asymmetric case, where one firm is integrated while the other one is separated, allows me to make three main contributions. First, I show that the effect of vertical integration on technology adoption by one firm is influenced significantly by the vertical structure of the other firm. Second, I consider the two main types of technology adoption games under an asymmetric set-up and broaden the understanding of the underlying mechanisms for the solving of such games. Finally, I develop an industrial policy aimed at encouraging firms to adopt the technology at the socially optimal timing.\

Suggested Citation

  • Benoit Voudon, 2019. "Technology Adoption under Asymmetric Market Structure," Trinity Economics Papers tep0819, Trinity College Dublin, Department of Economics.
    • Handle: RePEc:tcd:tcduee:tep0819
    as

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    File URL: https://www.tcd.ie/Economics/TEP/2019/TEP0819.pdf
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    References listed on IDEAS

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    Cited by:

    1. Benoit Voudon, 2019. "Vertical Integration in the presence of a Cost-Reducing Technology," Trinity Economics Papers tep0919, Trinity College Dublin, Department of Economics.

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    More about this item

    Keywords

    precommitment game; preemption game; timing of technology adoption; vertical relations; vertical integration;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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