Second-mover advantages in the strategic adoption of new technology under uncertainty

authored by

Heidrun C. Hoppe

Abstract

This paper introduces technological uncertainty into a timing game of new technology adoption. It is shown that the timing neither necessarily involves first-mover advantages in precommitment equilibria (Reinganum, Review of Economic Studies, XLVIII (1981) 395-405) nor rent-equalization due to the threat of preemption (Fudenberg and Tirole, Review of Economic Studies, LII (1985) 383-401). Rather, there may be second-mover advantages because of informational spillovers. Furthermore, the model predicts that the equilibrium payoffs will typically be discontinuous and non-monotonic in the probability that the new technology is profitable. A welfare analysis reveals several market failures, and suggests that policy intervention should adequately depend on the nature of uncertainty and the rate of technological progress.

External Organisation(s)

Universität Hamburg

Type

Article

Journal

International Journal of Industrial Organization

Volume

18

Pages

315-338

No. of pages

24

ISSN

0167-7187

Publication date

02.2000

Publication status

Published

Peer reviewed

Yes

ASJC Scopus subject areas

Industrial relations, Aerospace Engineering, Economics and Econometrics, Economics, Econometrics and Finance (miscellaneous), Strategy and Management, Industrial and Manufacturing Engineering

Sustainable Development Goals

SDG 9 - Industry, Innovation, and Infrastructure

Electronic version(s)

https://doi.org/10.1016/s0167-7187(98)00020-4 (Access: Closed)