TECHNOLOGY VALUATION DISTRIBUTIONS WITH HETEROGENEOUS ADOPTERS

This paper examines technology benefit allocation between an innovating firm and heterogeneous technology adopters. Using a triangular distribution of adopter innovation value, we find that as the upper bound increases, optimal innovation price increases, but at a slower rate. Similarly, as the lower bound decreases, price decreases and producer benefits increase. Finally, greater producer heterogeneity leads to greater producer benefits from innovation in non-competitive markets. An empirical application of the model is considered, bovine somatotropin adoption on dairy farms. The model generates an intuitive explanation of the common finding that average adopters are making zero or negative profits.


Issue Date:
2002
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/19777
Total Pages:
18
Series Statement:
Selected Paper




 Record created 2017-04-01, last modified 2017-08-24

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