A strategic search model of technology adoption and policy

Abstract

This chapter analyzes the link between adaptive R&D and the timing of new technology adoption in a strategic search model with heterogeneous firms. It is shown that the subgame-perfect equilibrium is in stopping rules with a reservation property. The model is used to examine the effect of rivalry, and whether R&D and adoption subsidies can increase social welfare and generate strategic advantage in international technological competition. It is found that the answers depend critically upon the relative magnitude of first-mover and second-mover advantages in the timing of adoption.

Citation

Hoppe, H.C. (2000), "A strategic search model of technology adoption and policy", Baye, M.R. (Ed.) Industrial Organization (Advances in Applied Microeconomics, Vol. 9), Emerald Group Publishing Limited, Leeds, pp. 197-214. https://doi.org/10.1016/S0278-0984(00)09051-9