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Technology adoption with forward looking agents

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  • COLLA, Paolo
  • GARCIA, Filomena

Abstract

We investigate the effects of forward looking behavior in technology adoption. The setup is an overlapping generation model where agents choose between two alternative networks taking in consideration both the installed base and the expected base. The latter element is the distinctive feature of our approach. We use results from the global games literature to select the unique equilibrium on which agents coordinate their expectations. We consider both the cases of incompatible and compatible technologies, and show that technologies cannot lock-in, while the adoption path exhibits hysteresis. Network choices are characterized both in terms of their long run properties and expected time of adoption.

Suggested Citation

  • COLLA, Paolo & GARCIA, Filomena, 2004. "Technology adoption with forward looking agents," LIDAM Discussion Papers CORE 2004041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2004041
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    References listed on IDEAS

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    Cited by:

    1. VERGARI, Cecilia, 2004. "Herd behaviour, strategic complementarities and technology adoption," LIDAM Discussion Papers CORE 2004063, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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    More about this item

    Keywords

    technology adoption; network externalities; global game; hysteresis;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • L0 - Industrial Organization - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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