TY  - JOUR
AU  - Jovanovic,Boyan
AU  - MacDonald,Glenn
TI  - Competitive Diffusion
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4463
PY  - 1994
Y2  - April 1994
UR  - http://www.nber.org/papers/w4463
L1  - http://www.nber.org/papers/w4463.pdf
N1  - Author contact info:
Boyan Jovanovic
New York University
Department of Economics
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8953
Fax: 212/995-4186
E-Mail: Boyan.Jovanovic@nyu.edu

Glenn MacDonald
Olin School
Washington University of St. Louis
Campus Box 1133, One Brookings Drive
St. Louis, MO 63130
E-Mail: macdonald@wustl.edu
AB  - The usual explanation for why the producers of a given product use different technologies involves "vintage-capital": A firm understands the frontier technology, but can still prefer an older, less efficient technology in which it has made specific physical and human capital investments. This paper develops an alternative. "information-barrier" hypothesis: Firms differ in the technologies they use because it is costly for them to overcome the informational barriers that separate them. The paper endogenizes both innovative and imitative effort. The industry life-cycle implications -- declining price and increasing output -- broadly agree with the Gort-Klepper data. Empirically, the paper focuses on the slow spread of Diesel locomotives, which can not be explained by the vintage-capital hypothesis alone. For instance, contrary to that hypothesis, railroads were buying new steam locomotives long after the Diesel first came into use -- exactly as the information-barrier hypothesis would imply.
ER  -