Strategic timing of adoption of new technologies under uncertainty: A note

Götz, Georg

doi:10.1016/s0167-7187(98)00016-2

Cited by 33 publications

(17 citation statements)

References 6 publications

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“…This part of the proposition is incorrect if we find a parameter setting for which the equilibrium is of the diffusion type for large λ and of the joint-adoption type for small λ. The following example contradicts Stenbacka and Tombak's Proposition 1 in this way, which is also mentioned in Götz (2000). In the same example it is also shown that part (b) of Stenbacka and Tombak's Proposition 1 is incorrect: In an open loop equilibrium the extent of dispersion between the adoption timings will be increased if the advantages of being the first to succeed decrease relative to the gains from being the second to succeed.…”

Section: Open Loop Equilibriummentioning

confidence: 71%

“…In the same example it is also shown that part (b) of Stenbacka and Tombak's Proposition 1 is incorrect: In an open loop equilibrium the extent of dispersion between the adoption timings will be increased if the advantages of being the first to succeed decrease relative to the gains from being the second to succeed. This is not mentioned in Götz (2000).…”

Section: Open Loop Equilibriummentioning

confidence: 97%

“…It turns out that the result is that each firm's payoff is equal in equilibrium. The remainder of Chapter 4 deals with the extension of Stenbacka and Tombak (1994) to the Reinganum-Fudenberg-Tirole model, which is also is considered in Huisman and Kort (1998a) and in Götz (2000). Stenbacka and Tombak assume that the time between the adoption and successful implementation of the new technology is stochastic.…”

Section: Game Theoretic Adoption Modelsmentioning

confidence: 99%

“…For instance, an econometric study by Brynjolfsson et al (1991) finds lags of two or three years before the organizational impacts of information technology become effective. Due to the lack of mathematical precision the paper of Stenbacka and Tombak led to two follow up papers, namely by Götz (2000) and by Huisman and Kort (1998a). Both papers correct mistakes of Stenbacka and Tombak.…”

Section: Introductionmentioning

confidence: 99%

“…the model that was introduced in Reinganum (1981) and extensively studied in Fudenberg and Tirole (1985). The extension to the Reinganum-Fudenberg-Tirole model as presented in Stenbacka and Tombak (1994) and studied in Götz (2000) and in Huisman and Kort (1998a) is considered in Section 4.3. The last section concludes.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Technology Investment: A Game Theoretic Real Options Approach

Huisman¹

2001

Theory and Decision Library

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Section: Open Loop Equilibriummentioning

confidence: 71%

Section: Open Loop Equilibriummentioning

confidence: 97%

Section: Game Theoretic Adoption Modelsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Technology Investment: A Game Theoretic Real Options Approach

Huisman¹

2001

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Strategic Intrafirm Innovation Adoption and Diffusion

Jensen

2001

Southern Economic Journal

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A theory of oligopolistic innovation adoption is developed in which intrafirm diffusions occur because the marginal cost of adoption is increasing in the rate of adoption. The equilibrium intrafirm diffusion curve is S‐shaped or concave, as are empirically observed ones. This diffusion curve is more likely to be S‐shaped the more competitive the industry, the larger the marginal cost of adoption or the pre‐innovation unit cost of production, or the smaller the demand. The diffusion is longer, and so the extent of adoption at any date is lower the more competitive the industry, the larger the marginal cost of adoption or the pre‐innovation unit cost of production, or the smaller the demand. A surprising result is that an increase in the unit cost reduction from the innovation has an ambiguous effect on diffusion. Obviously, a larger cost reduction allows each firm to earn a larger flow profit at every date from the same rate of adoption. However, a more subtle effect is that it also allows the firm to earn the same flow of profit with a slower rate of adoption, and so lower adoption costs. That is, the firms also have an incentive to spread out the diffusion over a longer period of time to save on adoption costs.

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Multiplant Firms and Innovation Adoption and Diffusion

Jensen

2004

Southern Economic Journal

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A new theoretical explanation is provided for the empirical observation that large firms usually adopt sooner, although there are notable exceptions. The analysis focuses on the adoption of an innovation of uncertain profitability by a large firm with two plants and a small firm with one. Marginal production costs are increasing in each plant, and economies of multiplant operation are possible. These have conflicting effects on the incentive to adopt. The large firm benefits more from adopting a success. However, if an adopter must shut down a plant to learn about the innovation, the loss of multiplant economies reduces the large firm's incentive to adopt. Absent multiplant economies, the large firm is more likely to lead a diffusion because its greater return from a success dominates. However, the small firm is more likely to lead a diffusion if there are multiplant economies and the large firm's learning cost disadvantage dominates.

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Strategic timing of adoption of new technologies under uncertainty: A note

Cited by 33 publications

References 6 publications

Technology Investment: A Game Theoretic Real Options Approach

Technology Investment: A Game Theoretic Real Options Approach

Strategic Intrafirm Innovation Adoption and Diffusion

Multiplant Firms and Innovation Adoption and Diffusion

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