On the Joint Decisions of R&D and Technology Adoption

This paper attempts to bridge the gap between R&D models that do not consider technology adoption decisions and technology adoption models that do not consider R&D decisions. It develops and analyzes a decision-theoretic model on the joint decisions of R&D and technology adoption of a firm. Two interesting comparative statics results are obtained. First, an increase in the cost of R&D reduces the incentive for a firm to do R&D. Secondly, an increase in the cost of technology adoption or an increase in the market interest rate reduces the incentive for a firm to adopt new technology and also reduces the incentive for a firm to do R&D. Under certain conditions, an increase in the cost of R&D increases the incentive for a firm to adopt new technology.

• 저널Management Science · 31(8) · 959–969
• 토픽Innovation Policy and R&D · Economics and Econometrics
• DOI10.1287/mnsc.31.8.959
• 저자Tom K. Lee