Sequential technology adoption with asymmetric firms |
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Authors: | Arghya Ghosh Munirul Nabin Haque |
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Institution: | 1. School of Economics , University of New South Wales , Australia A.Ghosh@unsw.edu.au;3. Deakin Business School , Australia |
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Abstract: | Abstract We analyse the incentives and welfare implications of costly technology adoption in a two-period duopoly model where firms have different amounts of capital. We also extend our framework to an open economy set-up and examine the relationship between trade and technology adoption. Our findings are as follows. First, no monotone relationship exists between the threshold cost of adoption and capital shares. Second, an unequal distribution of capital, despite lessening competition, can increase total surplus. Third, trade generally encourages adoption of modern technology unless the share of capital for the adopters is too low. |
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Keywords: | Asymmetry Cournot duopoly technology adoption trade surplus |
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