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Incomplete Adoption of a Superior Innovation

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  • Lapan, Harvey E
  • Moschini, Giancarlo

Abstract

We consider a model in which an innovating monopolist of a technologically superior intermediate input must sell this product to final output producers. Prior research shows that, with complete information, the monopolist's optimal strategy will lead to complete adoption of this technologically superior innovation. In this article we show that, when the price of some competitively supplied input used in the final product market is endogenous and is altered by adoption of the innovation, then the optimal pricing strategy of the monopolist may lead to incomplete innovation. Thus, the standard result of complete adoption of the superior technology is partly attributable to the partial equilibrium nature of prior models. Copyright 2000 by The London School of Economics and Political Science

Suggested Citation

  • Lapan, Harvey E & Moschini, Giancarlo, 2000. "Incomplete Adoption of a Superior Innovation," Economica, London School of Economics and Political Science, vol. 67(268), pages 525-542, November.
    • Handle: RePEc:bla:econom:v:67:y:2000:i:268:p:525-42
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    Citations

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    Cited by:

    1. Oehmke, James F. & Wolf, Christopher A., 2004. "Is Monsanto Leaving Money on the Table? Monopoly Pricing and Bt Cotton Value with Heterogeneous Adopters," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(3), pages 1-14, December.
    2. Dillen, Koen & Demont, Matty & Tollens, Eric, 2008. "Modelling heterogeneity to estimate the ex ante value of biotechnology innovations," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43945, European Association of Agricultural Economists.
    3. Harvey E. Lapan & Giancarlo Moschini, 2004. "Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 634-648.
    4. Wilson, William W. & Huso, Scott R., 2008. "Trait Stacking, Licensing, and Seed Firm Acquisitions on Genetically Modified Grains: A Strategic Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(3), pages 1-20.
    5. Demont, Matty & Tollens, Eric, 2001. "Welfare Effects Of Transgenic Sugarbeets In The European Union: A Theoretical Ex-Ante Framework," Working Papers 31852, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    6. Demont, Matty & Tollens, Eric, 2001. "Economic Impact Of Agricultural Biotechnology In The Eu: The Euwab Project," Working Papers 31857, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    7. Moschini, GianCarlo & Lapan, Harvey E. & Sobolevsky, Andrei, 2000. "Trading Technology As Well As Final Products: Roundup Ready Soybeans And Welfare Effects In The Soybean Complex," Transitions in Agbiotech: Economics of Strategy and Policy, June 24-25, 1999, Washington, D.C. 26002, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    8. Demont, Matty & Tollens, Eric, 2001. "Reshaping The Conventional Welfare Economics Framework For Estimating The Economic Impact Of Agricultural Biotechnology In The European Union," Working Papers 31835, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    9. Alexander E. Saak & David A. Hennessy, 2002. "Planting Decisions and Uncertain Consumer Acceptance of Genetically Modified Crop Varieties," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 308-319.
    10. Matty Demont & Marie Cerovska & Wim Daems & Koen Dillen & József Fogarasi & Erik Mathijs & František Muška & Josef Soukup & Eric Tollens, 2008. "Ex Ante Impact Assessment under Imperfect Information: Biotechnology in New Member States of the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(3), pages 463-486, September.
    11. Merel, Pierre R. & Carter, Colin A., 2005. "The Coexistence of GM and non-GM Crops and the Role of Consumer Preferences," 2005 Annual meeting, July 24-27, Providence, RI 19512, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Demont, Matty & Dillen, Koen & Daems, Wim & Sausse, Christophe & Tollens, Eric & Mathijs, Erik, 2009. "On the proportionality of EU spatial ex ante coexistence regulations," Food Policy, Elsevier, vol. 34(6), pages 508-518, December.
    13. Demont, Matty & Tollens, Eric, 2001. "Uncertainties Of Estimating The Welfare Effects Of Agricultural Biotechnology In The European Union," Working Papers 31828, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    14. Demont, Matty & Tollens, Eric, 2001. "Ex-Ante Evaluation Of The Economic Impact Of Agricultural Biotechnology In The European Union: The Case Of Transgenic Sugarbeets," 2001 Annual meeting, August 5-8, Chicago, IL 20631, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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