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On vertical relations and the timing of technology adoption

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  • Alipranti, Maria
  • Milliou, Chrysovalantou
  • Petrakis, Emmanuel

Abstract

We study the timing of new technology adoption in markets with input outsourcing, and thus with vertical relations. We find that technology adoption can take place earlier when firms engage in input outsourcing than when they produce the input in-house. Hence, the presence of vertical relations can accelerate the adoption of a new technology. We also find that particular features of a vertically related market, such as the bargaining power distribution and the contract type through which trading is conducted, can crucially affect the speed of technology adoption.

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  • Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2015. "On vertical relations and the timing of technology adoption," DICE Discussion Papers 198, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:198
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    Cited by:

    1. Smirnov, Vladimir & Wait, Andrew, 2021. "Preemption with a second-mover advantage," Games and Economic Behavior, Elsevier, vol. 129(C), pages 294-309.
    2. Di Corato, Luca & Moretto, Michele & Rossini, Gianpaolo, 2017. "Financing flexibility: The case of outsourcing," Journal of Economic Dynamics and Control, Elsevier, vol. 76(C), pages 35-65.
    3. Benoit Voudon, 2019. "Vertical Integration in the presence of a Cost-Reducing Technology," Trinity Economics Papers tep0919, Trinity College Dublin, Department of Economics.
    4. Xingtang Wang & Jie Li, 2020. "Downstream rivals’ competition, bargaining, and welfare," Journal of Economics, Springer, vol. 131(1), pages 61-75, September.
    5. Luca Sandrini, 2020. "Innovation, Competition, and Incomplete Adoption of a Superior Technology," "Marco Fanno" Working Papers 0251, Dipartimento di Scienze Economiche "Marco Fanno".
    6. Takeshi Ebina & Noriaki Matsushima, 2017. "Product differentiation and entry timing in a continuous-time spatial competition model with vertical relations," ISER Discussion Paper 1009, Institute of Social and Economic Research, Osaka University.
    7. 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.
    8. Benoit Voudon, 2019. "Technology Adoption under Asymmetric Market Structure," Trinity Economics Papers tep0819, Trinity College Dublin, Department of Economics.
    9. Bonnet, Céline & Schain, Jan Philip, 2017. "An empirical analysis of mergers: Efficiency gains and impact on consumer prices," DICE Discussion Papers 244, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    10. Smirnov, Vladimir & Wait, Andrew, 2018. "Blocking in a timing game with asymmetric players," Working Papers 2018-05, University of Sydney, School of Economics, revised May 2019.

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    More about this item

    Keywords

    technology adoption; vertical relations; outsourcing; two-part tariffs; wholesale price contracts; bargaining;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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