Heterogeneity and the dynamics of technology adoption
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Author(s)
Ryan, Stephen
Tucker, Catherine Elizabeth
Date Issued
August 2011
Journal
Quantitative Marketing and Economics
Publisher
Springer-Verlag
Citation
Ryan, Stephen P., and Catherine Tucker. “Heterogeneity and the Dynamics of Technology Adoption.” Quantitative Marketing and Economics 10.1 (2011): 63–109.
Version
Author's final manuscript
Abstract
We estimate the demand for a videocalling technology in the presence of both network effects and heterogeneity. Using a unique dataset from a large multinational firm, we pose and estimate a fully dynamic model of technology adoption. We propose a novel identification strategy based on
post-adoption technology usage to disentangle equilibrium beliefs concerning the evolution of the network from observed and unobserved heterogeneity in technology adoption costs and use benefits. We find that employees have significant heterogeneity in both adoption costs and network benefits, and have preferences for diverse networks. Using our estimates, we evaluate a number of counterfactual adoption policies, and find that a policy of strategically targeting the right subtype for initial adoption can lead to a faster-growing and larger network than a policy of uncoordinated or diffuse adoption.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Sloan School of Management
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Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
https://doi.org/10.1007/s11129-011-9109-0
