Network Effects and New Technology Adoption: Evidence from the Energy Sector
03.10.2022 14:15 – 15:30
INSTITUTE OF ECONOMICS AND ECONOMETRICS SEMINAR
Abstact:
Periods of widespread adoption of new technology (“technological revolutions”) are important to understanding broader economic growth but diffusion does not receive as much attention in the literature as invention. This paper contributes to this question by studying a recent technology revolution, fracking in the American oil & gas industry. I present empirical evidence that shared knowledge networks which arise when production information cannot be perfectly excluded from other firms results in productivity improvements when aggregate investment activity increases. Firms are aware of this valuable intangible capital and respond to other firms’ investment decisions by shifting their own investments towards the new technology in areas where network effects are strong. I develop a novel empirical framework which uses a spatial panel model to first estimate network strengths. Then I stress test that network in a 2SLS specification with plausibly exogenous instruments for industry-wide investment levels. I use a rich dataset to measure a new variable, firm-level adoption rates of new technology. Cross-sectional differences in the usefulness of shared knowledge networks shows that network effects do not have as meaningful of an impact on how much firms invest as they do on the adoption process or how they allocate investments between old and new technology.
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Room M 3250
Boulevard du Pont-d'Arve 40
1205 Geneva
Organisé par
Faculté d'économie et de managementInstitute of Economics and Econometrics
Intervenant-e-s
Vera CHAU, Professor, GSEMentrée libre
Classement
Catégorie: Séminaire
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