Vintage Effects and the Diffusion of Time-Saving Technological Innovations

Nilotpal Das 1 , 1 , Evangelos M Falaris 2 , 2  and James G Mulligan 3 , 3
  • 1 Royal Bank of Canada, ndas167@gmail.com
  • 2 University of Delaware, falaris@udel.edu
  • 3 University of Delaware, mulligaj@udel.edu

Abstract

An important aspect of the study of technological innovations is the explanation of the extent and pace of diffusion. We show that pooling data across vintages of a technology may result in misleading conclusions about the impact of key factors on the duration of time to adoption of the innovation. This is especially important for a technology that affects both product/service quality and a firm's costs of operation to different degrees as the technology evolves over time. Using data on the diffusion of point-of-sale optical scanners between 1974 and 1985, we find that factors such as the stock of prior adopters, household income, family size, the four-firm concentration ratio and item-pricing laws had predictably different effects on the diffusion rate depending on the vintage of the technology. These results are robust to controlling for unobserved heterogeneity among firms, inclusion of additional regressors and a change in functional form.

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The B.E. Journal of Economic Analysis & Policy (BEJEAP) is an international forum for scholarship that employs microeconomics to analyze issues in business, consumer behavior and public policy. Topics include the interaction of firms, the functioning of markets, the effects of domestic and international policy and the design of organizations and institutions.

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