Technology Adoption under Uncertain Innovation Progress
نویسنده
چکیده
Within uncertain technological progress, a firm has to decide when to update its technology and select a new one among a non-decreasing range over time. Under constant return to scale, the best existing technology is implemented. Replacement is triggered not only when the firm operated technology is sufficiently obsolete but also the wedge between the latest and the state of the arts grades is large enough. This result indicates that the higher the threat a better technology may be released is a cricial determinant in upgrading decision. Effects of the mean and the variance of technological progress on the adoption policy are also examined. JEL Classification: D81, D92, O33
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