Optimal adoption of complementary technologies

Boyan Jovanovic, Dmitriy Stolyarov

    Research output: Contribution to journalArticle

    Abstract

    When a production process requires two extremely complementary inputs, conventional wisdom holds that a firm would always upgrade them simultaneously. We show, however, that if upgrading each input involves a fixed cost, the firm may upgrade them at different dates, "asynchronously." This insight helps us understand why productivity rises with the age of a plant, why investment in structures is more spiked than equipment investment, and why plants have spare capacity. The bigger point of the paper is that complementarity does not necessarily imply comovement -not even for a single decision maker.

    Original languageEnglish (US)
    Pages (from-to)15-29
    Number of pages15
    JournalAmerican Economic Review
    Volume90
    Issue number1
    StatePublished - Mar 2000

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    Fixed costs
    Production process
    Comovement
    Decision maker
    Productivity
    Wisdom
    Equipment investment
    Upgrading
    Complementarity

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Jovanovic, B., & Stolyarov, D. (2000). Optimal adoption of complementary technologies. American Economic Review, 90(1), 15-29.

    Optimal adoption of complementary technologies. / Jovanovic, Boyan; Stolyarov, Dmitriy.

    In: American Economic Review, Vol. 90, No. 1, 03.2000, p. 15-29.

    Research output: Contribution to journalArticle

    Jovanovic, B & Stolyarov, D 2000, 'Optimal adoption of complementary technologies', American Economic Review, vol. 90, no. 1, pp. 15-29.
    Jovanovic B, Stolyarov D. Optimal adoption of complementary technologies. American Economic Review. 2000 Mar;90(1):15-29.
    Jovanovic, Boyan ; Stolyarov, Dmitriy. / Optimal adoption of complementary technologies. In: American Economic Review. 2000 ; Vol. 90, No. 1. pp. 15-29.
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