Vertical Integration, Transactions Costs, and Technology Adoption - in the Insurance Industry
48 Pages Posted: 2 Jun 2006
Date Written: June 2006
Advances in frontier technology are only the first in a series of steps that lead to economic growth. The next step involves use of that technology by economic agents. In this paper, we examine whether frictions created by differences in firm boundaries affect the speed with which firms adopt new technology. We show that vertical integration in distribution has a significant impact on the speed with which insurers adopt Internet applications that require coordination with agents. In contrast, vertical integration does not effect adoption of basic access technologies that can be adopted without agent cooperation.
Keywords: vertical relationships, adoption studies, Internet
JEL Classification: L22, O33, L86
Suggested Citation: Suggested Citation