Preemptive Adoptions of an Emerging Technology

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Many oligopolies exhibit continuing technological change and lumpy costs of adopting new technologies. If firms choose adoption dates in a game of timing and if the downstream market structure is a Bertrand duopoly, the equilibrium adoption pattern displays rent-dissipating increasing dominance; i.e., all adoptions are by the same firm, and the discounted value of profits is zero. These results need not hold for other market structures, including Cournot duopoly.