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Intra-Firm Diffusion, Learning and Profitability

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  • Stoneman, P

Abstract

In this paper we construct a model of the diffusion process based on means-variance approach to the choice of techniques. We show under what conditions S shaped diffusion curves can be predicted and consider the resultant relationship between diffusion speed and profitability. In a world of constant profitability we show that the shape of the diffusion curve and the determinants of the diffusion speed depend crucially on the nature of the mechanism by which the entrepreneur learns. If profitability is changing we show that diffusion speeds depend on the speed at which profitability increases and its determinants.

Suggested Citation

  • Stoneman, P, 1978. "Intra-Firm Diffusion, Learning and Profitability," The Warwick Economics Research Paper Series (TWERPS) 135, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:135
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/1978-1988/twerp135.pdf
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