Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175862
Authors: 
Ederington, Josh
Götz, Georg
Year of Publication: 
2018
Series/Report no.: 
Joint Discussion Paper Series in Economics 11-2018
Abstract: 
We develop a model in which ex ante identical firms make endogenous entry and technology adoption decisions. We show that this model is capable of matching the stylized facts in which entry and adoption are dispersed over time and that, in many industries, it is the newest firms which are the most likely to exhibit high productivity growth and adopt new innovations (i.e., leapfrogging). We then derive the characteristics of those industries where such leapfrogging is likely to occur and show that leapfrogging can induce reverse preemption (i.e., forward-looking incumbent firms delaying entry and adoption due to leapfrogging behavior). As an application, we demonstrate how, in an industry conducive to leapfrogging, research subsidies can actually reduce short-run consumer welfare by discouraging firms from entering the market with a basic technology.
Subjects: 
entry
technology adoption
JEL: 
L11
Document Type: 
Working Paper

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