Estimating Level Effects in Diffusion of a New Technology: Barcode Scanning at the Checkout Counter

Abstract

Cross-country or cross-industry studies of technology diffusion typically estimate how independent factors affect diffusion speed or timing, often based on a two-stage approach. In many applications, however, countries (industries) differ most in the saturation level of diffusion. In a novel, single-stage econometric approach to a standard diffusion model, we therefore estimate how the saturation level co-varies with independent factors. In our application to diffusion of an important retail information technology, we focus on the competitive effect of hypermarkets (superstores). We also find standard scale, income and labor substitution effects.

Keywords: diffusion, information technology, retail competition

JEL Classification: L5, L81, O33