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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26131
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| Title: | Technology Adoption with Multiple Alternative Designs and the Option to Wait |
| Authors: | Cabral, Luis |
| Keywords: | technology standards
alliances |
| Issue Date: | Jul-2004 |
| Series/Report no.: | EC-04-17 |
| Abstract: | Frequently, new technologies arise under two or more alternative
designs. Moreover, the state of each design evolves over time as a
result of various cumulative improvements. In this paper, we study the
strategic interaction between \incumbent" firms (those who already
own a design) and \entrants" (those who do not but would like to
adopt the new technology). We focus on two important decisions by an
entrant: when to choose a design and which design to choose. We show
that, in equilibrium, an entrant chooses the leading design and does not
wait. While the former decision is efficient, the latter is generally
not: the incumbent firms' inability to commit to future prices leads to
inefficiently early technology adoption. |
| URI: | http://hdl.handle.net/2451/26131 |
| Appears in Collections: | Economics Working Papers
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