Heterogeneity and the Dynamics of Technology Adoption

69 Pages Posted: 29 Jul 2011 Last revised: 12 Sep 2014

See all articles by Stephen P Ryan

Stephen P Ryan

MIT; NBER

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS)

Date Written: July 2011

Abstract

We estimate the demand for a videocalling technology in the presence of both network effects and heterogeneity. Using a unique dataset from a large multinational firm, we pose and estimate a fully dynamic model of technology adoption. We propose a novel identification strategy based on post-adoption technology usage to disentangle equilibrium beliefs concerning the evolution of the network from observed and unobserved heterogeneity in technology adoption costs and use benefits. We find that employees have significant heterogeneity in both adoption costs and network benefits, and have preferences for diverse networks. Using our estimates, we evaluate a number of counterfactual adoption policies, and find that a policy of strategically targeting the right subtype for initial adoption can lead to a faster-growing and larger network than a policy of uncoordinated or diffuse adoption.

Suggested Citation

Ryan, Stephen P and Tucker, Catherine E., Heterogeneity and the Dynamics of Technology Adoption (July 2011). NBER Working Paper No. w17253. Available at SSRN: https://ssrn.com/abstract=1898509

Stephen P Ryan (Contact Author)

MIT ( email )

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NBER ( email )

1050 Massachusetts Avenue
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Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS) ( email )

100 Main St
E62-536
Cambridge, MA 02142
United States

HOME PAGE: http://cetucker.scripts.mit.edu

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