Finding Mr. Schumpeter: an Empirical Study of Competition and Technology Adoption

Jeffrey T. Macher (Georgetown - McDonough)
Nathan H. Miller (Georgetown - McDonough)
Matthew Osborne (Toronto - Rotman)

Abstract: We estimate the effect of competition on the adoption of a cost-reducing technology in the cement industry, using data that span 1953-2013. The new technology, the precalciner kiln, reduces fuel usage and hence fuel costs. We find adoption is more likely if the fuel cost savings are large, and less likely if there are many nearby competitors. We also find that competition damps the positive effect of cost savings. The results are consistent with a dynamic theoretical model in which competition can deprive firms of the scale necessary to recoup sunk adoption costs.

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