Timing of technology adoption and product market competition |
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Authors: | Chrysovalantou Milliou Emmanuel Petrakis |
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Institution: | aDepartment of International and European Economic Studies, Athens University of Economics and Business, Athens 10434, Greece;bCESifo, Munich, Germany;cDepartment of Economics, University of Crete, Rethymnon 74100, Greece |
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Abstract: | This paper examines how product market competition affects firms' timing of adopting a new technology, as well as whether the market provides sufficient adoption incentives. It demonstrates that adoption dates differ, not only among symmetric firms, but also among markets with different market features. More specifically, technology adoption can occur earlier in a market with Cournot competition than in a market with Bertrand competition. It can also occur earlier in a market in which goods are not too close substitutes. Therefore, this paper shows that competition toughness does not always reinforce adoption incentives. When goods are sufficiently differentiated, adoption occurs later than is socially optimal. |
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Keywords: | JEL classification: L13 O31 O32 O33 |
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