Innovation and Adoption of Electronic Business Technologies

Dresden Discussion Paper in Economics No. 09/04

35 Pages Posted: 15 Aug 2007

See all articles by Kai E. Sülzle

Kai E. Sülzle

United Nations Framework Convention on Climate Change

Date Written: February 1, 2007

Abstract

This paper presents a duopoly model of e-business technology adoption. A leader and a follower benefit from a new e-business technology with uncertain quality depending on its innovation and adoption cost and both firms' adoption timing. When innovation and adoption require large set-up costs, the leader favors quick adoption by the follower. The follower prefers either late or no adoption. This is due to a delayed first-mover benefit which stems from a network effect that benefits the innovator of such a new technology standard. It is shown that inter-firm adoption subsidies are a viable tool to quicken adoption.

Keywords: Electronic Business, Adoption, Innovation, Network Effects

JEL Classification: O31, L1

Suggested Citation

Sülzle, Kai E., Innovation and Adoption of Electronic Business Technologies (February 1, 2007). Dresden Discussion Paper in Economics No. 09/04, Available at SSRN: https://ssrn.com/abstract=1003171 or http://dx.doi.org/10.2139/ssrn.1003171

Kai E. Sülzle (Contact Author)

United Nations Framework Convention on Climate Change ( email )

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Germany
0228-815-1748 (Phone)

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