Monopoly and the Incentive to Innovate When Adoption Involves Switchover Disruptions

• 成果类型: Article
• 署名作者: Holmes, Thomas J.; Levine, David K.; Schmitz, James A., Jr.
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities; Washington University (WUSTL); Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; National Bureau of Economic Research
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.4.3.1
• 发表日期: 2012
• 页码: 1-33
• 关键词: supply chain glitches; trade liberalization; market-structure; PRODUCTIVITY; COMPETITION; US; COSTS; performance; persistence; diffusion

摘要

Arrow (1962) argued that since a monopoly restricts output relative to a competitive industry, it would be less willing to pay a fixed cost to adopt a new technology. We develop a new theory of why a monopolistic industry innovates less. Firms often face major problems in integrating new technologies. In some cases, upon adoption of technology, firms must temporarily reduce output. We call such problems switchover disruptions. A cost of adoption, then, is the forgone rents on the sales of lost or delayed production, and these opportunity costs are larger the higher the price on those lost units. (JEL D21, D42, L12, L14, O32, O33)