Akademik Veri Yönetim Sistemi
Association of Southern European Economic Theorists (ASSET) 2011 Annual Conference, Evora, Portekiz, 26 - 29 Ekim 2011, ss.1-21
It is standard in the literature that adoption of the new technology permits perfect transfer of technological know-how, so that all the firms obtain the same cost reduction. However, as also argued by Blalock and Gertler (2009), firms with higher capability in terms of investment in R&D and highly educated employees benefit from technology adoption more than others. Motivated by this evidence, we study the game of investment in firms’ capabilities that facilitate technology adoption. We consider a two-staged duopoly game in differentiated product market. In the first stage, firms decide simultaneosly whether to invest in capability. In the second stage, given firms’ investment in capability, firms decide when to adopt the new technology and compete a la Cournot or Bertrand as in Milliou and Petrakis (2010). While the investment in capability has a fixed cost, it comes with higher reduction in marginal cost of production following technology adoption. JEL Classification: L13, O31, O32, O33.