Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/142004 
Year of Publication: 
2015
Series/Report no.: 
CSIO Working Paper No. 0130
Publisher: 
Northwestern University, Center for the Study of Industrial Organization (CSIO), Evanston, IL
Abstract: 
How do successive, forward-looking agents experiment with interdependent and endogenous technologies? In this paper, trying a radically new technology not only is informative of the value of similar technologies, but also reduces the cost of experimenting with them, in effect expanding the space of affordable technologies. Successful radical experimentation has mixed effects: it improves the immediate outlook for further experimentation but decreases the value and the marginal value of experimentation in a longer term, resulting in less ambitious `incremental' experimentation and in a reduced size of radical experimentation. Incremental experimentation lowers the option value of similar technologies, which may spur a new wave of radical experimentation. However, experimentation eventually stagnates for all parameters of the model.
JEL: 
C73
D83
O3
Document Type: 
Working Paper

Files in This Item:
File
Size
858.23 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.