Technology Adoption Subsidies: An Experiment with Managers

Tinbergen Institute Discussion Paper No. 07-082/3

42 Pages Posted: 6 Nov 2007

See all articles by Rob Aalbers

Rob Aalbers

University of Amsterdam - SEO Economic Research

Eline van der Heijden

Tilburg University, CentER

Johannes (Jan) J. M. Potters

Tilburg University - CentER

Daan van Soest

Tilburg University - CentER & Department of Economics

Herman R.J. Vollebergh

PBL Netherlands Environmental Assessment Agency (Bilthoven); Tilburg Unversity ; CESifo Institute; Tilburg Sustainability Centre; Tilburg University - Center and Faculty of Economics and Business Administration

Date Written: October 2007

Abstract

We evaluate the impact of technology adoption subsidies on investment behavior in an individual choice experiment. In a laboratory setting professional managers are confronted with an intertemporal decision problem in which they have to decide whether or not to search for, and possibly adopt, a new technology. Technologies differ in the per-period benefits they yield, and their purchase price increases with the per-period benefits provided. We introduce a subsidy on the more expensive technologies (that also yield the larger per-period benefits), and find that the subsidy scheme induces agents to search for and adopt these more expensive technologies even though the subsidy itself is too small to render these technologies profitable. We speculate that the result is driven by the positive connotation (affect) that the concept 'subsidy' invokes.

Keywords: framed field experiment, search model, technology subsidies

JEL Classification: C9, D8, H2

Suggested Citation

Aalbers, Rob and van der Heijden, Eline and Potters, Johannes (Jan) J. M. and van Soest, Daan P. and Vollebergh, Herman R.J., Technology Adoption Subsidies: An Experiment with Managers (October 2007). Tinbergen Institute Discussion Paper No. 07-082/3. Available at SSRN: https://ssrn.com/abstract=1027862 or http://dx.doi.org/10.2139/ssrn.1027862

Rob Aalbers

University of Amsterdam - SEO Economic Research ( email )

Roetersstraat 29
Amsterdam, 1018 WB
Netherlands

Eline Van der Heijden

Tilburg University, CentER ( email )

P.O. Box 90153
Department of Economics
5000 LE Tilburg
Netherlands

Johannes (Jan) J. M. Potters

Tilburg University - CentER ( email )

Department of Economics
P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 8204 (Phone)
+31 13 466 3042 (Fax)

Daan P. Van Soest

Tilburg University - CentER & Department of Economics ( email )

P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 2072 (Phone)

Herman R.J. Vollebergh (Contact Author)

PBL Netherlands Environmental Assessment Agency (Bilthoven) ( email )

Bezuidenhoutseweg 30
Den Haag, 2594 AV
Netherlands
+31655736920 (Phone)

Tilburg Unversity ( email )

Tilburg
Netherlands

HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/h.r.j.vollebergh.htm

CESifo Institute ( email )

Munich
Germany

Tilburg Sustainability Centre ( email )

P.O. Box 90153
Tilburg, North Brabant 5000 LE
Netherlands

Tilburg University - Center and Faculty of Economics and Business Administration ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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