Timing of technology adoption and product market competition

Abstract

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Rivalry, Market Structure and Innovation: The Case of Mobile Banking

“…On the empirical side, existing studies document diverse and conflicting results, suggesting that a competitive market can either encourage or deter innovative activities. 2 Further, both theoretical and empirical literature on the relation between competition and technology adoption is limited (Milliou and Petrakis, 2011;p.515). Almost none of the prior work examines how rivalry adoptions, a proxy for dynamic competitive pressure, interact with market structure during the technology diffusion process.…”

“…For instance, markets with low concentration ratios are better characterized by competition in prices (Bertrand competition) and highly concentrated markets dominated by competition in quantities (Cournot competition). Milliou and Petrakis (2011) develop a theoretical model and show that Cournot competition encourages technology adoption by the second firm more than Bertrand competition. This is because technology adoption increases adopters' output and decrease peers' output, which is referred to as the strategic effect.…”

“…The only work is Milliou and Petrakis (2011), who capture the increase of competitive pressure by contrasting a Cournot market to a Bertrand market since markets featured with price competition (Bertrand competition) are more competitive than markets with non-price competition (Cournot competition) (Singh and Vives, 1984). They show that a Cournot market encourages the technology adoption by the second firm more than a Bertrand market.…”

Competition, strategic delegation and delay in technology adoption

“…2 This stream of literature offers useful insights to understand the implications of various factors, such as uncertainty regarding the value of newly available technology (Jensen, 1982;Balcer and Lippman, 1984;Bhattacharya et al, 1986;Jensen, 2004), strategic interaction between sellers and buyers of technology and their market powers (Stoneman and Ireland, 1983;Ireland and Stoneman, 1986;Rivas 2010), pre-commitment by firms in oligopoly and decreasing cost of technology adoption over time (Reinganum, 1981a& 1981bQuirmbach, 1986), preemption incentive in oligopoly (Fudenberg and Tirole,1985;Riordan and Salant, 1994), informational externality (Chamley and Gale, 1994), network externality (Choi and Thum, 1998), technological breakthrough versus improvement (Doraszelski, 2004), mode of product market competition (Milliou and Petrakis, 2011), etc., to firm's optimal timing of technology adoption.…”

“…Therefore, it seems to be important to examine the implications of managerial delegation on timings of technology adoption, by considering different types of incentive schemes, under alternative modes of product market competition. In order to address these issues, in this paper we extend the analysis of Milliou and Petrakis (2011) to allow for strategic managerial delegation.…”