Timing Of Technology Adoption Research Articles

Timing of technology adoption in the presence of patent licensing

Timing of technology adoption in the presence of patent licensing

The Timing of Technology Adoption in Network Industries

This paper analyzes the effect of network externalities on firms’ timing of new technology adoption in a network industry. In a pre-commitment game under Cournot competition, network effects tend to accelerate the timing of the leader and the follower regarding their adoption dates: under the rational expectations hypothesis and also under the firms’ output commitment. However, while an increase in network effects tends to reduce the discrepancy between the optimal social timing of the new technology adoption and the market-driven time of adoption in the rational expectations model, the opposite occurs under the output commitment game.

Upstream market structure and the timing of technology adoption

We study the timing of new cost‐reducing technology adoption in vertically related markets with either upstream monopoly or upstream separate suppliers. We find that technology adoption in the downstream market can take place earlier under upstream monopoly than under upstream separate suppliers. Hence, an upstream monopoly supplier can accelerate the adoption of new technology downstream. We also show that this finding does not depend on the particular features of a vertically related market, such as the contract type through which trading is conducted or the mode of downstream competition.

Aggregate dynamics and microeconomic heterogeneity: the role of vintage technology

We study how the timing of technology adoption through capital accumulation shapes firm-level productivity dynamics and quantify its aggregate implications in a model of heterogeneous firms. Using data on the census of incorporated Italian firms and exploiting the lumpiness of capital accumulation, we document that large investment episodes lead to productivity gains at the firm and sectoral level due to vintage effects. In a general equilibrium model of firm heterogeneity, we find that the presence of vintage technology constitutes a powerful microeconomic-based amplification mechanism of aggregate shocks relative to a benchmark real business cycle model.

On vertical relations and the timing of technology adoption

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 distribution of bargaining power and the contract type through which trading is conducted, can crucially affect the speed of technology adoption.

Effect of Piracy on Adoption of Technological Innovation in the Entertainment Industry

Advances in technology have enabled producers of entertainment goods to reach customers in innovative ways. However, new technologies also make it easier for users to infringe on the content. Producers argue that piracy hurts their ability to innovate, while critics argue that piracy acts as a leveler and encourages consumer friendly innovation. In this paper, we explore the interplay of piracy and technology adoption based on a dynamic model. In this model, the firm always releases a physical product initially and has to make a decision on whether and when to adopt a newer digital platform to facilitate digital release. The new platform can help the producer target broader customer base, but can be costly and might lead to higher piracy level. We show that, when the cost for innovation adoption is small, the piracy in the existing channel has no effect on the timing of technology adoption. However, when this cost is sufficiently high, piracy in the existing channel will act as a competing force and lead to an earlier adoption of digital channel if a large number of users are willing to move to the new legal version at a full price. If not, piracy discourages and delays adoption. In addition, the piracy caused by new channel adoption can lead the monopolist to delay the adoption. Thus, only under specific conditions, does piracy create incentives to adopt innovations. In most case, piracy actually discourages the adoption of innovation. While we find that some level of piracy is beneficial to consumers, a higher level of piracy delays adoption of the digital platform, hurting overall consumer welfare.

Timing of precision agriculture technology adoption in US cotton production

The timing of technology adoption is influenced by profitability and farmer ability to bear risk. Innovators are typically more risk tolerant than laggards. Understanding the factors influencing early adoption of precision agriculture (PA) technologies by cotton farmers is important for anticipating technology diffusion over time. The factors influencing the timing of grid soil sampling (GSS), yield monitoring (YMR) and remote sensing (RMS) adoption by cotton producers was evaluated using multivariate censored regression. Data for cotton farmers in 12 states were obtained from a survey conducted in 2009. The factors hypothesized to influence the timing of adoption included farm characteristics, operator characteristics, PA information sources, adoption of other PA technologies, and farm location. The results suggest that different factors influenced when cotton farmers adopted GSS, YMR and RMS after these technologies became commercially available. For example, land ownership was associated with the timing of GSS adoption, but not YMR or RMS adoption; farmer age was correlated with the timing of GSS and YMR adoption, but not RMS adoption; and obtaining PA information from consultants affected the timing of GSS and RMS adoption, but not YMR adoption. The only factors correlated with the early adoption of all three technologies were beliefs that PA would improve environmental quality and the adoption of at least one other PA technology. Thus, the potential for improved environmental quality appears to be a strong adoption motivator across PA technologies, as is the earlier adoption of other PA technologies. This research may be useful for farmers, researchers, Extension personnel, machinery manufacturers, PA information providers and agricultural retailers to anticipate the future adoption of new and emerging PA technologies.

Private and Social Learning with Endogenous Timing: An Experimental Analysis

We conducted laboratory experiments to investigate how private and public information affect the selection and timing of technology adoption. Our experiments extend the standard herding model to more accurately represent the innovation decision problem. Subjects drew private signals and observed actions of their group before making an irreversible choice between a safe and a risky innovation. Free to choose the timing of their adoption, equilibrium behavior dictates adoption of the innovation favored by the first private signal. Nevertheless, roughly half of subjects delayed adoption beyond the first round. When they did adopt, subjects gave more weight to their private signals than to their peers' actions. The speed and accuracy of adoption decisions improved when subjects observed their peers' decisions, even when subjects' payoffs were statistically independent --- as if observation exerts peer pressure'' on subjects. Finally we examined several plausible behavior rules and conclude that subjects find it profitable, on average, to wait until the second round and then follow their private signals.

Timing of technology adoption and product market competition

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.

The Formation of Peer Reputation among Physicians and Its Effect on Technology Adoption

This paper studies patient volume and the severity of case mix as they relate to physicians’ human capital accumulation and pace of technology adoption by exploring a quality signaling mechanism through which physicians build peer reputation. We show that volume building leads physicians to actively manage case mix and find that successful surgeries (particularly for difficult cases) raise future volume, whereas failed surgeries (particularly for easy cases) deplete it. Surgeons with a high patient census and a low‐severity case mix adopt the new technology more rapidly. These findings highlight the role of peer reputation for growing practice size and the timing of technology adoption.

Adoption of cost-reducing technology by asymmetric duopolists in stochastically evolving markets

This work considers the adoption of technology that will reduce unit production costs by one or two players sharing a single market. Three models are developed involving a monopolist, a Stackelberg game with two firms and a designated order of adoption, and an open loop game with no prespecified order of adoption. In the “two-firm” cases the firms are allowed to differ in per unit production costs both before and after technology adoption, as well as the capital outlay required for adoption. In each setting, an evolution of market size is manifested by the level of an exogenous parameter which evolves according to geometric Brownian motion. Structural and numerical results are presented that help to explain the logic and optimal timing of technology adoption. The inclusion of cost and investment level asymmetry leads to a variety of cases. In some instances the high-cost firm is the first to adopt, and adopts at the point that maximizes its profits. In other cases, the higher-cost firm is the first to adopt but the timing of its adoption is dictated by the threat that its rival can make a pre-emptive move. In some cases the lower-cost firm does pre-empt its higher-cost rival and it is optimal for the higher-cost firm to sit idle while this happens. Such an outcome is possible even when both firms have the same per unit production costs after adoption. This work expands on existing literature in that it is the first to consider output rate selection, pricing decisions and technology investments in a continuous time framework while considering a real deferral option and asymmetric players. [Supplementary materials are available for this article. Go to the publisher's online edition of IIE Transactions for the following free supplemental resource: Appendix]

Timing of Technology Adoption and Product Market Competition

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 shows that adoption dates differ not only among symmetric firms but also among markets with Cournot and Bertrand competition. More specifically, Cournot competition can lead to earlier adoption than Bertrand competition. It shows also that competition toughness does not always reinforce adoption incentives. When goods are differentiated enough, adoption occurs later than it is socially optimal.

Expectations, network effects and timing of technology adoption: some empirical evidence from a sample of SMEs in Italy

We provide evidence on the influence of expectations and network effects on the timing of technological adoption. By considering a sample of SMEs operating in Italy, we focus on the determinants of their decision to adopt Fast Ethernet, a communication standard for Local Area Networks (LANs). We find that both expectations and network effects significantly affect the timing of adoption. In particular, price expectations generally tend to delay adoption and (indirect) network effects in the form of backward compatibility as well as informational spillovers tend to foster adoption. Firm size also matters.

Generational Transitions and the Timing of Technology Adoption

Increases in input prices are often cited as the impetus to the investment in resource conserving technologies. We demonstrate that in addition to price changes, adoption of new production technologies may be triggered by discrete events, such as generational transitions, that change the relative value of existing and potential production activities. Though increases in price may encourage investment in new technologies, results indicate the actual timing of investment is more closely linked to the occurrence of discrete events.

Unbundling the local loop

We study competition for high bandwidth services in the telecommunications industry by introducing the possibility of unbundling the local loop, where leased lines permit the entrant to provide services without building up its own infrastructure. We use a dynamic model of technology adoption and study the incentives of the entrant to lease loops and compete “service-based”, and/or to build up a new and more efficient infrastructure and compete “facility-based”, given the rental price. We show that the incumbent sets too low a rental price for its loops; hence, the entrant adopts the new technology too late from a social welfare perspective. The distortion may appear not only on the timing of technology adoption but also on the type (quality) of the new technology to be adopted. We also show that while regulating the rental price may suffice to achieve socially desirable outcomes, a sunset clause does not improve social welfare.

The Timing of Technology Adoption by a Cost-minimizing Firm

The Timing of Technology Adoption by a Cost-minimizing Firm

Market structure and the timing of technology adoption with network externalities

The paper shows that in the presence of network externalities, consumers adopt conventional technologies too early; the waiting option for a newly emerging technology is not exercised enough. This problem is aggravated when the new technology is provided by a single producer with market power because any positive value created via waiting by current consumers will be ex post appropriated by the monopolist. Therefore, the monopolist's power to extract surplus operates against his own interests in this dynamic setting. The paper also shows how the producer of a new technology can partially overcome the problem of too little waiting by using licensing as a commitment device.