Network Effects and New Technology Adoption: Evidence from the Energy Sector

03.10.2022 14:15 – 15:30



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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Organisé par

Faculté d'économie et de management
Institute of Economics and Econometrics


Vera CHAU, Professor, GSEM

entrée libre


Catégorie: Séminaire

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