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Market Segmentation and the Diffusion of Quality-Enhancing Innovations: The Case of Downhill Skiing
Abstract
We report econometric results concerning the diffusion of detachable chairlifts in the United States that provide the first empirical evidence that the adoption of a technological innovation by a firm decreases the likelihood that a local competitor will also adopt it. We model the effect that an innovation in service speed has on a f's incentive to differentiate the quality of its service from that of its competitors. In our model, the incentive to adopt is negatively related to the number of competitors who have already adopted. Our empirical results support this hypothesis. Copyright (c) 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.
... Genesove (1999) provides a study of the adoption of offset printing by newspapers and argues that firms in more competitive markets adopted earlier. Mulligan and Llinares (2003) show that ski-lifts were less likely to adopt quality-enhancing technology when local competitors had done so. ...
... Firms that have digital connections to the Internet are much more likely to adopt 56K. 26 Larger firms, as measured by the number of switches a firms serves, are also more likely to adopt both standards. This effect is estimated to be quadratic, probably driven by the fact that the very largest firms in this data set do not adopt. ...
... Demographic characteristics do not appear to be very important as only a few are estimated to be significant. Surprisingly, the percentage of the pop- 26 As above, digital indicates the firm has a T1 line or offers ISDN service to customers, but could be 0 if a firm has ISDN lines but does not offer ISDN service to consumers. The parameter ρ is estimated to be negative, implying that firms that adopt one technology are less likely to adopt the other. ...
56K modems were introduced under two competing incompatible standards. We show the importance of competition between Internet Service Providers in the adoption process. We show that ISP's were less likely to adopt the technology that more competitors adopted. This result is particularly striking given that industry participants expected coordination on one standard or the other. We speculate about the role of ISP differentiation in preventing the market from achieving standardization until a government organization intervened.
... Genesove (1999) provides a study of the adoption of offset printing by newspapers and argues that firms in more competitive markets adopted earlier. Mulligan and Llinares (2003) show that ski-lifts were less likely to adopt quality-enhancing technology when local competitors had done so. ...
... Firms that have digital connections to the Internet are much more likely to adopt 56K. 26 Larger firms, as measured by the number of switches a firms serves, are also more likely to adopt both standards. This effect is estimated to be quadratic, probably driven by the fact that the very largest firms in this data set do not adopt. ...
... Demographic characteristics do not appear to be very important as only a few are estimated to be significant. Surprisingly, the percentage of the pop- 26 As above, digital indicates the firm has a T1 line or offers ISDN service to customers, but could be 0 if a firm has ISDN lines but does not offer ISDN service to consumers. The parameter ρ is estimated to be negative, implying that firms that adopt one technology are less likely to adopt the other. ...
56K modems were introduced under two competing incompatible standards. We show the importance of competition between internet service providers in the adoption process. We show that ISPs were less likely to adopt the technology that more competitors adopted. This result is particularly striking given that industry participants expected coordination on one standard or the other. We speculate about the role of ISP differentiation in preventing the market from achieving standardization until a standard setting organization intervened.
... Genesove (1999) provides a study of the adoption of offset printing by newspapers and argues that firms in more competitive markets adopted earlier. Mulligan and Llinares (2003) show that ski-lifts were less likely to adopt quality-enhancing technology when local competitors had done so. ...
... Given there is strong institutional support for the symmetry of the technologies, we take this as reasonable evidence in favor of the restrictions imposed in the earlier regressions. 22 We find similar results when allowing parameters to differ 22 We also tested a variety of specifications capturing whether this behavior varied across markets with different numbers of ISPs. However, after conditioning out differences in ISPs and local demographics we did not find large differences in behavior over markets of different across technologies in a linear framework similar to that in Column V. ...
... Given there is strong institutional support for the symmetry of the technologies, we take this as reasonable evidence in favor of the restrictions imposed in the earlier regressions. 22 We find similar results when allowing parameters to differ 22 We also tested a variety of specifications capturing whether this behavior varied across markets with different numbers of ISPs. However, after conditioning out differences in ISPs and local demographics we did not find large differences in behavior over markets of different across technologies in a linear framework similar to that in Column V. ...
In an effort to produce interoperable products, firms frequently participate in Standard Setting Organizations (SSOs) to collaboratively set technical standards for products used by networks of consumers. Some SSO members say they suffer from a type of holdup: after they sink technology-specific investments in developing and implementing a standard using a particular patented technology the patent owner can set licensing terms that exploit those investments. These members have called on SSOs to enhance competition between patent owners by soliciting and considering licensing terms for competing technologies ex ante, before anointing one as "the standard." However, more competitive licensing terms may dampen incentives to innovate. This paper analyzes the balance between the welfare benefits of the added competition and the welfare costs of reduced innovation. The model of R&D investment and standard setting predicts that both total welfare and consumer welfare are higher when an SSO considered licensing terms ex ante as long as the cost of innovation is not "high." The model also predicts that the welfare benefits of ex ante consideration of licensing terms grow as the costs of innovation falls. However, when the cost of innovation is "high" the negative welfare effects are always small.
... There are 66 countries in the world that offer outdoor alpine skiing (Vanat, 2015). Previous studies have focused mainly on major destinations (in terms of skier visits) in European Alpine countries (Borsky & Raschky, 2009;Falk, 2008Falk, , 2011Pawlowski, 2011;Wolff, 2014) and regions in the U.S.A. (Fonner & Berrens, 2014;Mulligan & Llinares, 2003). However, these results for major destinations cannot be generalized. ...
... The vertical drop of the ski resort tends to indicate the ride quality as well as the approximate length of ski slopes. Therefore, it is expected that difference in altitude between top and base of the ski resort is positively related to one-day lift ticket price (Fonner & Berrens, 2014;Mulligan & Llinares, 2003). BASEALT: ...
In this study, we used the hedonic price method to examine what affected one-day ski lift ticket prices in Norway in the winter season 2014/2015. The analysis was based on geographic information, supply-related characteristics and on climatic data of 83 alpine ski resorts. Additionally, we estimated which ski resorts were under- or overpriced. The results indicate that vertical drop, share of intermediate difficulty ski slopes, number of snow parks, travel distance to the nearest large ski resort in Sweden and price at the nearest ski resort in Norway positively affect prices. Travel distance to the nearest ski resort in Norway and to the nearest large urban area in Denmark or Sweden, a total lift capacity of less than 3000 persons per hour, location in western Norway and a location close to more than two other ski resorts significantly and negatively affect prices. The results suggest that, according to a price–quality relationship, the Hemsedal ski resort provided the highest quality of skiing experience. Overall, ski lift ticket prices were influenced by the pricing decisions of leading ski resorts in Norway. Managers can use the results of this study to make better pricing decisions to increase the profitability of their ski resorts.
... Colombo and Mosconi (1995) concentrate on the diffusion of flexible automation production and design/ engineering technologies in the Italian metal working industry. Mulligan and Llinares (2003) analyse the diffusion of highspeed detachable chairlifts in the US ski industry. Hannan and McDowell (1987) study the adoption of automatic teller machines by US banking firms. ...
... 8 On the contrary, evidence on stock and order effects is mixed. Depending on the characteristics of technology and output market structure, Mulligan and Llinares (2003) and Hannan and McDowell (1987) find opposite impact of precedent adoption in the technology diffusion process, although their competitive models do not attempt to distinguish the order and stock effects. The results of Karshenas and Stoneman (1993) and Colombo and Mosconi (1995) lend little support to the existence of stock and order effects, whilst those of Gourlay and Pentecost (2002) and Kerr and Newell (2003) support the negative impact of order effects and stock effects respectively. ...
We provide a comprehensive framework of analyzing the diffusion process of renewable technology, incorporating epidemic and pecuniary effects. Relying on a panel dataset consisting of information from 1207 CDM wind projects in thirty provinces over the period 2004-2011, we find strong evidence on the dominant role of the epidemic effect and new evidence on pecuniary effects that generate a diminishing marginal effect of profitability in inducing technology adoption.
Our numerical simulation demonstrates that the epidemic effect can play a quantitatively important role in the spread of renewable energy technology and markedly enhance the optimal social welfare. Our findings convey important policy implications for regulators when choosing policy instruments to enhance the diffusion and adoption of clean technology. Price instruments should be complemented by a wide range of non-market instruments to address non-market barriers.
... pricing framework has been used for the Alpine skiing industry to reveal which ski resort characteristics are important and to what extent for skiers, as well as to investigate whether ski resorts overcharge or underprice.Mulligan and Llinares (2003) examined the effect of a detachable chairlift on ski lift prices among 344 ski resorts in the US. Falk (2008) analysed how supply-related factors affect ski lift ticket prices and ranked 84 ski resorts in Austria according to their quality characteristics. ...
A general assumption of the standard hedonic price model is that producers produce outputs/services efficiently, and deviations from this situation are assumed to involve either overcharging or undercharging. Using the profit maximizing behaviour, we derive an alternative hedonic model to show when prices are overcharged for services or products with the same characteristics. We argue that price charged by a firm depends on the price charged by the neighbouring firms giving rise to spatial dependence in prices. Based on this philosophy, we present a spatial-lag frontier hedonic pricing model. This new modelling framework is illustrated using data from Norwegian ski resorts in the winter season of 2014/2015 to examine whether one-day ski lift ticket prices are interrelated with other operators and to what extent the ski lift tickets are overcharged, if any.
... The hedonic pricing framework has been used for the Alpine skiing industry to reveal which ski resort characteristics are important and to what extent for skiers, as well as to investigate whether ski resorts overcharge or underprice. Mulligan and Llinares (2003) ...
... Peu de contributions ont abordé le contexte économique des sports d'hiver, au sens de la section 2 ci-dessus, notamment les innovations en ski alpin (Mulligan et Llinares, 2003). Plus proches de la section ...
Cette nouvelle analyse des grands évènements sportifs internationaux
(GESI) procède par comparaison historique, quantitative quand
c’est possible, du contexte économique dans lequel ils se sont produits
après avoir précisé que ce contexte influence l’impact économique de
l’évènement et la valeur du multiplicateur d’impact. La nouvelle analyse
comparative est illustrée et mise en oeuvre respectivement pour les Jeux
Olympiques de Grenoble 1968 et les Jeux Olympiques d’Albertville
1992, tous deux localisés dans la même région économique (Rhône
Alpes). La même analyse n’aurait évidemment pas pu être conduite en
1968, l’économie du sport en tant qu’analyse appliquée aux sports d’hiver
n’existait pas encore. On verra que les premiers articles économiques
publiés consacrés aux sports d’hiver n’auraient été d’aucune aide pour
l’étude des Jeux d’hiver d’Albertville 1992 non plus.
... Matzler et al. 2007). Accordingly, a ski resort may face a change in a skier's willingness to pay (WTP) for a ski-lift ticket. 1 Using an econometric approach, Mulligan and Llinares (2003) examined the effects (for the ski resort and skiers) of using faster lifts to reduce waiting lines. One early example of research on ski-lift ticket pricing and congestion is Barro and Romer (1987). 2 They pointed out that skiers purchase a ski-lift ticket based on an expected utility that depends on the number of lift rides per day. ...
In this paper, we estimate price-response functions for a ski resort using a conjoint framework. The analysis is based on survey data from 350 skiers at a large ski resort in the inland region of Norway. The results suggest that the waiting time at the main lifts (crowdedness) and the proportion of slopes open affect the optimal (profit-maximizing) price the ski resort should charge for a one-day ski pass. The results of this study support previous findings from the literature using alternative methodological approaches and can be used directly by ski resort managers when developing new pricing schemes for their ski resort.
... In the regressions reported here, we include two measures to capture investments in resort capacity and quality: total lift capacity and average vertical drop (weighted by capacity). 13 12 See Mulligan and Llinares (2003) for an effective application of these data. Because this source does not provide pre-1976 data, we match the 1976 values with our 1970 Census tract and weather data. ...
... Some amenities are more important to the customer than others. For instance, Mulligan and Llinares (2003) found that customer service is more important to the average customer than installing a high-speed chairlift to the average skier. However, this may not be true for all types of skiers. ...
A multistage decision process is involved when season ticket holders choose to go snow skiing. First, they decide whether to purchase the season ticket. After the ticket is purchased, each day of the season the skier decides whether to ‘hit the slopes’ that day. Empirical models are estimated to examine how prices affect the number of season tickets sold for different types of skiers and how snowfall, weekends and time of the season influence skier visits. The findings suggest that skiers will ski enough times to receive at least a 50% discount than the daily ticket price.
... As such, the adoption of green technologies has recently attracted increased interest from marketing researchers (Bollinger and Gillingham 2012;Narayanan and Nair 2013;Shriver 2015). However, even if new, cleaner (green) technologies have already been developed, the empirical technology diffusion literature has demonstrated that the adoption of new technologies can be slow (Bass 1969;Mahajan et al. 1990;Hannan and McDowell 1984;Mulligan 2003;Baker 2001;Engers et al. 2009). There exist a variety of potential explanations for slow adoption: i) firms do not realize the full societal benefits of using the green technology and the green technology is not superior in terms of the firms' private incentives; ii) firms may have long equipment replacement cycles which slow the migration to a socially and privately better technology; or iii) firms may not have sufficient information to evaluate whether or not a switch to a green technology is in their private interests. ...
Green technology adoption may be limited by a variety of factors including a lack of sufficient private incentives, long equipment replacement cycles, or lack of information regarding the green alternatives. In California, multiple policy tools including financial incentives, command-and-control regulation, and information and training were used to overcome these obstacles in order to reduce the use of the polluting technology used in traditional dry cleaning. Exploiting the changing regulatory environment, I evaluate the effectiveness of the different policy tools by estimating a dynamic, durable goods replacement model with entry and exit. Because the strict regulations affect future years only, identifying the discount rate is crucial, which I estimate to be 0.94. Using counterfactual simulations under alternative policy regimes, I find that the provision of information and training offered through demonstrations increased adoption of that technology (wet cleaning) by over 200 %. Price incentives (via fees and grants) would have been ineffective at achieving widespread adoption of green technologies but were effective at accelerating adoption when combined with a future ban on polluting technologies. Using this combination of policy instruments led to a net welfare gain of $71 million (NPV) in 2002 when the policies were implemented.
... In the last few years, sport organizations have become exposed to an increased competition and to greater demands from consumers and suppliers. CI systems are strategic in order to capture and increase client loyalty, and constitute a tool for differentiation (Mayer, 2009;Mulligan & Llinares, 2003). ...
Research question: While quality management literature has addressed products and services separately, the founders of total quality presented this management philosophy as universally oriented. The purpose of this study is to empirically test the Deming management model (DMM).
Research methods: We tested the proposed research model using structural equation modeling, based on data collected from golf courses and ski resorts, in three different countries.
Results and findings: The results support the application of the model to services, in general, and sports tourism, in particular.
Implications: Our conclusions reinforce the recognition of the method's effectiveness and identify the cause–effect patterns, within its basic scope, highlighting the importance of leadership in the success of a quality improvement program. Lastly, a discrepancy of this study is the incapability to support the relationship between continuous improvement and customer satisfaction. Nevertheless, the results should be interpreted while considering the presented limitations.
... The adoption of new, cleaner technologies is essential in reducing pollution. Even if the technologies have already been developed, the empirical technology diffusion literature has demonstrated that the diffusion of new technologies can be slow (Bass 1969, Mahajan et al. 1990, Hannan & McDowell 1984, Mulligan 2003, Baker 2001, Engers et al. 2009). There are a variety of potential explanations for slow adoption: i) firms do not realize the full societal benefits of using the green technology and the green technology is not superior in terms of the firms' private incentives; ii) firms may have long equipment replacement cycles which slow the migration to a socially and privately better technology; or iii) firms may not have sufficient information to evaluate whether or not a switch to a green technology is in their private interests. ...
New technologies are crucial in dealing with the problem of air and water pollu-tion, which is an increasingly important issue with serious health and environmental consequences. However, adoption of environmentally friendly technologies can be slow if the new technologies are not superior in terms of the firms' private incentives, if firms have long equipment replacement cycles, or if firms do not have sufficient information to evaluate whether or not a switch to a green technology is in their pri-vate interests. To evaluate these potential explanations and the policies designed to address them, I use an importance sampling technique with simulated maximum like-lihood estimation to estimate a dynamic, durable good replacement model with entry and exit for garment cleaning firms in southern California, where alternative clean-ing technologies have seen only limited adoption to date. I utilize a unique data set comprised of equipment permitting information, grant recipient lists, and product demonstration attendance lists, and I control for and exploit changing legislation to estimate the effect of fees and incentives on green equipment purchases, as well as the effect of the product demonstrations. The estimated model is used to perform counterfactual analyses to compare the predicted adoption and entry/exit decisions by firms under different regulatory regimes. While the model is tailored to the gar-ment cleaning industry, it can be adapted to other applications involving the diffusion of technologies in regulated industries.
... A few papers have investigated this issue over the last years. Using data on 344 resorts located in the United States, Mulligan and Llinares (2003) find that the adoption of detachable chairlifts is positively correlated with ticket price. Pricing also depends on location, vertical drop or number of local competitors. ...
Using a unique data set with 168 ski resorts located in France, this paper investigates the relationship between lift ticket prices and supply-related characteristics of ski resorts. A non-parametric analysis combined with a principal component analysis is used to identify the set of efficient ski resorts, defined as those where the lift ticket price is the cheapest for a given level of quality. Results show that the average inefficiency per lift ticket price is less than 1.5 euros for resorts located in the Pyrenees and the Southern Alps. The average inefficiency is three times higher for ski resorts located in the Northern Alps, which is explained by the presence of large connected ski areas offering many more runs for a small surcharge.
... Since the utility of the service is determined by the number of runs possible for the skier, the authors found that the vertical drop and the lift capacity affect the prices of lift tickets. More recently, Mulligan and Llineares (2003) presented an econometric model to measure the effects on the ticket price of innovation in the transport systems (high-speed, automatic lifts). Based on the empirical evidence of 400 North American ski resorts, the authors highlighted the disincentive to technological innovation in the presence of first-movers, since innovation, and in particular expensive innovation, has been used as a deterrent for entry of new competitors. ...
We use the hedonic framework to estimate and simulate the hedonic ticket prices of 19 ski resorts in the Emilian Apennines and Altipiani Trentini. To do so, we combine data on lift facilities and slopes from several sources as well as climatic data and characteristics of the ski resorts over the 2008‐2011 winter seasons. Hedonic linear and logarithmic regression models are estimated for weekdays and weekends ticket prices. Our robust regression of changes in hedonic prices with respect to the characteristic of the ski resorts yield precise and consistent estimates of positive effects on ticket prices. We find that willingness to pay (WTP) for the length of winter season tends to be higher than transport capacity, length and the altitude of the slopes or the other characteristic of the chairlifts and ski runs. Then, we use our estimates to predict the ticket price level as a measure of the quality of the ski resort. We found that the perception of skiers is very selective and their choices are based on the characteristic of the ski resort.
... In the model, rather than fragmenting completely into a larger number of specialized ski areas, both the local and national markets evolve in a manner predicted by the EFC approach of Shaked and Sutton with existing ski areas responding to increased local and national demand by increased investment in additional lift capacity with exit coming from relatively smaller, low-1 For example, both Morey (1984) and Walsh, Miller, and Gilliam (1983) provide evidence from surveys of skiers' willingness to pay for less congestion in lift lines and on the slope Morey provides empirical evidence that skiers are willing to pay for relatively more skiable acres at a ski area, while Walsh, Miller, and Gilliam document the separate effects of both waits in the lift line and congestion on the slope in skiers' willingness to pay for a day of skiing. Recent work by Mulligan and Llinares (2003) shows that the connection between capacity and service quality is especially important in explaining why time-saving technology embodied in new lift capacity follows a diffusion pattern in local markets that is distinctly different from that of innovations that lower production costs. See Davidson (1988) for an example of a short-run model of a retail market that accounts for consumers' opportunity cost of time and willingness to pay in order to avoid waiting in line. ...
This paper illustrates the importance of the role of land constraints in a model explaining the effect of real income and transportation cost on long-run lift-ticket prices and lift capacity in a competitive two-sector ski industry. The model also explains large endogenous increases in lift capacity and real prices over time in response to an increase in real skier income despite a static number of skier-days per year. This approach, thus, has points in common with work by Shaked and Sutton (1986 and 1987), Sutton (1991 and 1998) on endogenous vertical differentiation and persistent market concentration.
... However, there appears some support for Porter's classification from a ski industry study. Mulligan and Linares (2003) studied the diffusion of detachable chair-lifts between 1981 and 1997, and suggested that investment in chair-lifts was made by ski-fields wanting to differentiate themselves. It appears from this research that ski-areas which invested in these lifts focused on avid skiers who were prepared to pay higher prices and wanted the benefits of faster chair-lifts. ...
The economic and strategic issues of developing ski-fields and ski-resorts is an area somewhat over-looked by academics. Drawing on a number of sources, this paper explores activities through which geographic terrain is transformed into customer value. It examines factors used to determine investment levels, including capacity and demand, and the economies of chai- lifts and snow-making. Strategies by which these investments are maximized are discussed. These strategies are characterized as adding value, cost reduction, creating new value or expanding markets. Finally, this paper addresses the economics of integrating activities on the mountains. While a large number of strategies are found that are common to many fields, there appears as yet no clear pattern in profitability between fields, a reflection of the peculiar environment each resort faces.
... For Swiss ski resorts, BERWERT et al. (1996) find that proximity to population centres is positive and significant in three out five specifications. MULLIGAN and LLINARES (2003) use the number of population closely adjacent to ski resorts as measure of the local market and accessibility. Based on 344 ski resorts in the U.S, the authors find that the number of population within 125 miles has a positive effect on ski lift prices. ...
This paper provides empirical evidence on international price differences in ski lift tickets based on 214 ski areas in Austria, France, and Switzerland for the winter season 2010/2011. We find that French and Austrian one-day lift tickets (net of VAT) are an average of 17 and 7 per cent lower, respectively, than Swiss ticket prices after controlling for ski areas' characteristics. The results of quantile regressions show that the magnitude of the international price differences is quite similar for low- and high-priced ski areas. Furthermore, price differences across countries do not increase with distance to the nearest border ski area.
... 3. Karshenas and Stoneman (1993), Abdulai and Huffman (2005) and Colombo and Mosconi (1995) fail to find any support for the stock or order effects. Genesove (1999) and Mulligan and Llinares (2003) confirm competitive effects but do not attempt to distinguish between the two effects or to control for other potential effects. Molyneux and Shamroukh (1996) find evidence that contradicts the predictions of the stock and order effects. ...
Karshenas and Stoneman (RAND J Econ 24(4):503–528, 1993) gathered four theories of technology adoption: the rank, stock, order
and epidemic effects. Tests of these four effects reveal support for rank and epidemic but not the stock or order effects.
Since then numerous other studies have tried to find evidence in support of the stock and order effects. But evidence has
been elusive, until now. Further, a survey by Frame and White (J Econ Lit 42:116–144, 2004) concludes that much more work
is needed into financial innovation. This paper accomplishes three goals: (1) evidence is found to support certain technology
adoption theories (the order effects and possibly the stock effects), (2) since the technology under consideration is a financial
innovation called bounce protection, the paper answers Frame and White’s call for papers, and (3) refinements are made to
the Karshenas and Stoneman methodology and found to be superior to the original empirical model.
... Relatively little attention has been paid thus far to the price-quality relationship as it concerns ski resorts. A notable exception is Mulligan and Llinares (2003), who studied the price-setting behaviour of 344 US ski resorts from the 1996 to 1997 ski season. The authors find that the ski areas with a higher vertical drop and faster chairlifts (measured as a dummy variable) charge higher lift ticket prices. ...
Using a unique database of 84 ski resorts and 1520 ski lifts and cable cars in Austria, we investigate the relationship between lift ticket prices for the 2005–2006 season and the ski resorts’ characteristics. The results, which were obtained by OLS and robust regression techniques, show that the length of the ski runs, transport capacity (measured as vertical transport metres per hour), share of modern high-speed chairlifts and gondolas, measures of snow conditions (i.e. mean altitude of uphill lift stations, length of ski season, and share of ski runs with artificial snow), and access to neighbouring ski areas covered by the same lift pass all have positive and significant effects on the price of a 1-day lift ticket and a 6-day ski pass. As regards the magnitude, we find that the elasticity of lift tickets with respect to the share of high-speed chairlifts and gondolas is considerably larger than that of the snowmaking capacity. Furthermore, the mean altitude of the uphill lift station and duration of the winter season (both taken as a proxy variables for snow conditions) are more important than the length of the ski runs and total lift capacity (measured as vertical transport metres per hour) in determining the price of a 6-day lift ticket. Given the empirical estimates, we also provide a ranking of the ski resorts according to their quality characteristics.
... In the process of time the application of the hedonic pricing method has been extended in many other fields of interest. Nowadays it is used for instance to estimate the value of the ''green premium'' on environmentally-friendly consumer goods, the value of environmental risk on human health (Hanley & Spash 1993), in the field of tourism to estimate the value of tourist resorts (Papatheodorou 2002, Espinet, Saez, Coenders & Fluvia 2003) or to investigate the price-quality relationship of ski resorts (Mulligan & Llinares 2003, Falk 2008). To obtain an accurate hedonic estimation the market needs to be in equilibrium. ...
This paper estimates the individual willingness to pay (WTP) for the option to exercise risk-taking. We use data of 69 Austrian Ski resorts and 3,637 reported ski accidents and apply the hedonic market method. Our results suggest that the individual WTP for a hypothetical increase in the possibility to undertake risk-taking activities lies between 11% and 25% of the price of a ski-lift-ticket. Monetized values help design pricing schemes that set incentives to reduce risk-taking behavior as well as to develop alternative instruments to reduce the adverse effects of risk-taking activities (e.g. accidents). Copyright 2009 Blackwell Publishing Ltd.
... The empirical investigation of Mulligan and Llinares (2003) provides an exception. ...
ABSTRACT : This paper addresses the question of the software companies’ timing of adoption of the open source software (OSS) business models comprising the supply of OSS products and/or services. The game-theoretic technology adoption models do not explain well the observed diffusion patterns of the OSS business model among the sample of 716 European software firms. Instead, it seems that the network effects influentially shape the diffusion path of the OSS supply strategies. Our study further contributes to the technology diffusion literature as our econometric model aims at separating, unlike the previous empirical studies on technology diffusion, the role that the replacement effect has in the diffusion patterns of new technologies. Our data detect a clear replacement effect hindering the incumbents’ investments in new technology. The expected price declines of the computer programs – and thus the expected declining license revenues from the proprietary software – accelerate less the incumbent firms’ timing of adoption of the OSS supply model than that of the entrants.
... In a recent empirical study, Mulligan and Llinares (2003) show that the incentive to adopt a quality-enhancing innovation by skiing areas decreases with the number of direct competitors that have already adopted the innovation. Therefore, a diffusion process is found to occur even when talking about product innovations, not just when considering cost-reducing innovations. ...
In this paper I analyze the diffusion of a product innovation that was recently made available for licensed purchase within an industry with identical firms producing the same good. The main assumptions are a decreasing yet always positive incentive to adopt the innovation, and an extremely high cost of immediate adoption, but which decreases with the time passed since the innovation has become available. The resulting equilibrium in the industry is a gradual adoption of the innovation rather than an immediate one, with each firm having an optimal time of adoption. In the long run equilibrium, as the number of firms in the industry becomes very large, it is also shown that the incentive to innovative does not disappear. However, as the number of firms in the industry increases, each firm is shown to have an incentive to adopt earlier. The assumptions here as well as the results of this model match the results of recent studies in the empirical literature.
... In process of time the use of hedonic pricing to estimate the value of an environmental service by observing the change in price of the marketed good has extended in many other fields of interest. Nowadays it is used for instance to estimate the value of the "green premium" on environmentally-friendly consumer goods, the value of environmental risk on human health (Hanley & Spash 1993), in the field of tourism to estimate the value of tourist resorts (Papatheodorou 2002, Espinet, Saez, Coenders & Fluvia 2003) or to investigate the price-quality relationship of ski resorts (Mulligan & Llinares 2003, Falk 2008). To get an accurate estimation using the hedonic pricing method the market has to be in equilibrium. ...
Within the last decades an increasing number of people practice risky sports in their leisure time. Although there exists a vast number of economic literature on risk-taking behavior, an estimation of the individual willingness to pay (WTP) for the option to exercise risk-taking is missing. Monetarized values could support private industries in design pricing schemes that set incentives to reduce risk-taking behavior as well as public policy-makers to develop alternative instruments to reduce the adverse effects of risk-taking activity (e.g. accidents). We use data of 69 Austrian Ski resorts and 3,637 reported ski accidents and apply the hedonic market method. Our results suggest that the individual WTP for a hypothetical increase in the possibility to undertake risk-taking activities lies between 11\% and 25\% of the price of a ski-lift-ticket.
... To account for ski resort expansions and alterations that may affect prices of nearby homes, we compiled data from the White Book of Ski Resorts (Enzel, various years). Published annually since 1976 (latest and last edition in 2006), the White Book provides detailed information on resort characteristics such as lift capacity, vertical drop, ticket prices, etc., for an essentially complete list of ski resorts in the U.S. and Canada (see Mulligan and Llinares 2003 for an effective application of these data). For ski resorts that met a minimum size threshold (lift capacity of at least 1000 persons/hour and at least 500 vertical feet drop), we aggregated the data for all ski resorts in a region to arrive at the regional values. ...
We use a hedonic framework to estimate and simulate the impact of global warming on real estate prices at North American ski resorts. To do so, we combine data on resort-area housing prices from two sources--data on average prices for U.S. Census tracts across a broad swath of the western U.S. and data on individual home sales for four markets in the western U.S. and Canada, each available over multiple decades--with detailed weather data and characteristics of ski resorts in those areas. Our OLS and fixed-effects models of changes in house prices with respect to medium-run changes in the share of snowfall in winter precipitation yield precise and consistent estimates of positive snowfall effects on housing values in both data sources. We use our estimates to simulate the impact of likely climate shifts on house prices in coming decades and find substantial variation across resort areas based on climatic characteristics such as longitude, elevation, and proximity to the Pacific Ocean. Resorts that are unfavorably located face likely large negative effects on home prices due to warming, unless adaptive measures are able to compensate for the deterioration of conditions in the ski industry.
... For example, both Morey (1984) and Walsh, Miller, and Gilliam (1983) provide evidence from surveys of skiers' willingness to pay for less congestion in lift lines and on the slope. 2 Recent work by Mulligan and Llinares (2003) shows that the connection between capacity and service quality is especially important in explaining why time-saving technology embodied in new lift capacity follows a diffusion pattern that is distinctly different from that of innovations that lower production costs. Section 2 reviews the theoretical and empirical literature linking increased capacity and prices by incumbents to entry deterrence, while Section 3 provides background information for the U.S. downhill ski industry. ...
This paper illustrates the importance of the role of long-run capacity constraints in a model explaining the effect of real income and transportation cost on long-run lift-ticket prices and lift capacity in a competitive two-sector ski industry. Despite the large number of game-theoretic models in the literature linking excess capacity to higher prices and limited entry, the model explains large increases in capacity and real prices over time despite a static number of skier-days per year without having to resort to an argument based on market power. This approach, thus, has points in common with work by Sutton (1991 and 1998) on endogenous vertical differentiation and persistent market concentration. The distinguishing feature of this paper, however, is that it links endogenous changes in service capacity directly to changes in both quality and price.
... More recently, Mulligan and Llinares (2003) establish another reason for adoption of a process innovation: horizontal differentiation in the services provided by the adopting firms. They find that innovations that increase service speed in the U.S. ski industry result in a different diffusion pattern than previously found in the literature. ...
This paper is a draft of a chapter in a forthcoming book entitled, The Economics of Persistent Innovators,to be published by Springer. We consider the persistent adoption of innovations by firms that are not directly involved in the innovation process. In addition to a survey of the literature, we offer empirical evidence of persistent adoption for a specific time-saving process innovation: high-speed detachable chairlifts.
Using a database of 60 New England ski areas, the correlation between several primary resort characteristics and the 2018-2019 adult day ticket prices is analyzed. A hedonic price model is used to run an OLS regression on the data and determine the importance and significance of 13 variables. This study determines that ski area size (including number of trails, skiable acres, and vertical drop), the snowmaking capabilities of the mountain, the number of nearby restaurants, and the proximity of a ski area to local residents and population centers have the greatest positive influence on ticket price. The hedonic model is also used to form a ranked list of ski areas in New England by their expected ticket price, representing resort quality, and how this compares to their actual ticket price, representing resort value. This study can provide valuable information to ski area management and tourism offices across New England, who can better understand the motivations for alpine skiing customers in the region.
Using the largest sample of European golf clubs, this study examined different attributes that affect green fee prices to better understand the stagnated European golf market. First, we identified different European sub-markets. We derived a hedonic pricing model from previous research and then calculated log-linear OLS regressions. We selected different prices for a round of golf as dependent variables and considered twelve objectively measurable golf club attributes as well as market or country variables. The dispersion of green fees among European golf clubs can primarily be explained by differences in the age of the club, the length of the golf course, three infrastructure and service attributes, environmental certification, top placement in the ranking of the best golf courses and the golf club's market or country. The findings clearly illustrate that the European golf market cannot be considered a single market and thus that different stakeholders within this market have to consider these differences in their golf management.
Research question: Golf courses generate revenue from two sources: memberships and green fees. Particularly in Europe, golf clubs rely on income from memberships. We examine the factors that are generally relevant to golfers when paying green fees or becoming club members. We compare the findings to evaluate the differences between the two revenue sources.
Research methods: We compile a database of N = 669 German golf courses for the 2015 season to test the hedonic price models of membership fees compared to green fees on both weekdays and weekends. In addition, beyond the attributes of golf courses that are usually investigated in the literature and can be characterized as market determinants, we capture management determinants such as quality certificates. A comparison of the log-linear ordinary least squares and quantile regressions on the three price constructs reveals fruitful insights for price differentiation.
Results and findings: The empirical analysis indicates that the dispersion of membership fees among golf clubs can mainly be explained by differences in the number of holes, the golf course’s difficulty, its proximity to a large city, and two certificates. For the pricing of green fees, the number of holes, a competitive market situation, and the course’s difficulty and age are important factors.
Implications: The findings indicate not only the similarities but also the differences between memberships and green fees. In terms of practical applications for golf clubs, developing group-specific marketing strategies and suitable offers for club members and guest golfers would help improve long-term club viability.
Cel. Celem pracy jest: (1) porównanie cech ośrodków narciarskich w Polsce, Czechach i Słowacji w stosunku do cen karnetów narciarskich, (2) wskazanie najlepszych ośrod-ków narciarskich w tych krajach w sensie stosunku oferowanej jakości do ceny karnetu narciarskiego, (3) porównanie różnic w oferowanej jakości w stosunku do ceny karnetu narciarskiego w tych krajach. Metoda. Dane do analizy stanowiły cechy jakości i ceny jednodniowych karnetów nar-ciarskich 245 ośrodków narciarskich w Polsce, Czechach i Słowacji. Dane pozyskano ze stron www badanych ośrodków, serwisów informacyjnych skiinfo.pl, holidayinfo.cz i ho-lidayinfo.sk. Indeks jakości skonstruowano na podstawie analizy składowych głównych (Principal Components Analysis) siedemnastu cech jakości badanych ośrodków. Porów-nanie ośrodków narciarskich wykonano za pomocą analizy FDH (Free Disposable Hull). Różnice w poziomie cech jakości ośrodków oraz cen karnetów obliczono za pomocą nie-parametrycznego testu H Kruskala-Wallisa. Wyniki. Z osiemnastu badanych cech aż jedenaście wyraźnie różnicuje pomiędzy sobą ośrodki w badanych krajach. Należy do nich także cena karnetu narciarskiego: w Polsce karnety narciarskie są najdroższe, zaś na Słowacji najtańsze. Analiza FDH ujawniła istnienie ośmiu efektywnych-z punktu widzenia narciarzy-ośrodków narciarskich, czyli takich, które za najniższą cenę oferuje daną jakość. Ośrodki polskie wyróżniają się istotnie wyższą jakością od ośrodków czeskich i słowackich. Ograniczenia badań i wnioskowania. W analizie nie uwzględniano wpływu, jaki na decyzję narciarzy może mieć zatłoczenie i kolejki do wyciągów, baza noclegowa, re-stauracje i atrakcje związane z życiem nocnym w ośrodku (z wyjątkiem nocnej jazdy na nartach). Na wyniki może wpływać także struktura wykorzystanego indeksu jakości. Implikacje praktyczne. Wyniki analizy FDH umożliwiły zidentyfi kowanie nieefektyw-nych ośrodków w badanych krajach oraz wskazanie różnic, jakie występują w zakresie jakości pomiędzy ośrodkami. Wnioski umożliwiają wybór najefektywniejszych ośrodków narciarskich, mogą też być pomocne przy konstruowaniu ofert turystycznych, wskazując na przykład na konieczność korekty cen karnetów narciarskich w niektórych ośrodkach. Oryginalność pracy. Jak dotąd nie wykonano analizy porównawczej polskich, czeskich i słowackich ośrodków narciarskich za pomocą analizy FDH. Rodzaj pracy. Artykuł prezentuje oryginalne wyniki badań empirycznych.
Purpose. The aim of this study is: (1) to compare the features of ski resorts in Poland,
the Czech Republic and Slovakia in relation to the prices of ski passes, (2) to indicate
the best ski resorts in these countries in terms of value for money – the ratio of offered
quality to the price of ski passes, (3) to compare of differences in value for money (e.g.
offered quality compared to the price of a ski pass) in these countries.
Method. Data for analysis were features of quality and prices of one-day ski passes
for 245 ski resorts in Poland, the Czech Republic and Slovakia. The data was obtained
from the websites of the surveyed ski resorts and web pages: skiinfo.pl, holidayinfo.cz
and holidayinfo.sk. The quality index of ski resorts was constructed using Principal
Component Analysis of the seventeen quality features regarding the studied resorts.
The comparison of ski resorts was conducted using the Free Disposable Hull analysis.
Differences in the level of quality of the resorts’ and ski pass prices were calculated
using the Kruskal-Wallis H nonparametric test.
Findings. Eleven features of the eighteen surveyed locations were differentiated between
surveyed countries (including the price of the ski pass: Polish ski passes are
the most expensive and the cheapest are in Slovakia). The FDH analysis revealed
the existence of eight effective – from the skiers’ point of view – ski resorts, i.e. those
that offer the given quality at the lowest price (value for money). Polish ski resorts are
characterized by signifi cantly higher quality than Czech or Slovak resorts.
Research and conclusion limitations. The analysis did not take the impact that congestion
and queues to lifts, prices of accommodation, restaurants and nightlife in the
resort (except night skiing) might have had on the skiers decision into account. The
results may also be infl uenced by the method of quality index construction.
Practical implications. The results of FDH analysis enable the identifi cation of ineffi
cient ski resorts in the analysed countries and indication of the differences existing in
terms of quality between ski resorts. The conclusions allow to select the most effi cient
ski resorts which can be helpful in the design of tourist offers and it may also indicate
the need for adjustments in prices of ski passes at some ski resorts.
Originality. No comparative analyses of Polish, Czech and Slovak ski resorts were
found in the literature to date. Type of paper. The article presents the results of empirical research.
Purpose. The aim of this study is: (1) to compare the features of ski resorts in Poland, the Czech Republic and Slovakia in relation to the prices of ski passes, (2) to indicate the best ski resorts in these countries in terms of value for money - the ratio of offered quality to the price of ski passes, (3) to compare of differences in value for money (e.g. offered quality compared to the price of a ski pass) in these countries. Method. Data for analysis were features of quality and prices of one-day ski passes for 245 ski resorts in Poland, the Czech Republic and Slovakia. The data was obtained from the websites of the surveyed ski resorts and web pages: skiinfo.pl, holidayinfo.cz and holidayinfo.sk. The quality index of ski resorts was constructed using Principal Component Analysis of the seventeen quality features regarding the studied resorts. The comparison of ski resorts was conducted using the Free Disposable Hull analysis. Differences in the level of quality of the resorts' and ski pass prices were calculated using the Kruskal-Wallis H nonparametric test. Findings. Eleven features of the eighteen surveyed locations were differentiated between surveyed countries (including the price of the ski pass: Polish ski passes are the most expensive and the cheapest are in Slovakia). The FDH analysis revealed the existence of eight effective – from the skiers' point of view – ski resorts, i.e. those that offer the given quality at the lowest price (value for money). Polish ski resorts are characterized by significantly higher quality than Czech or Slovak resorts. Research and conclusion limitations. The analysis did not take the impact that congestion and queues to lifts, prices of accommodation, restaurants and nightlife in the resort (except night skiing) might have had on the skiers decision into account. The results may also be influenced by the method of quality index construction. Practical implications. The results of FDH analysis enable the identification of inefficient ski resorts in the analysed countries and indication of the differences existing in terms of quality between ski resorts. The conclusions allow to select the most efficient ski resorts which can be helpful in the design of tourist offers and it may also indicate the need for adjustments in prices of ski passes at some ski resorts. Originality. No comparative analyses of Polish, Czech and Slovak ski resorts were found in the literature to date. Type of paper. The article presents the results of empirical research.
To date, econometrics-based diffusion studies have focused almost exclusively on the timing of adoption of new technology by firms and individuals. While there are detailed case studies on the evolution of firefighting for some of the largest U.S. cities in the nineteenth century, ours is the first formal econometric diffusion study of the timing of adoption of steam-powered, firefighting engines, whose first adoption was an important initial step in the evolution from independent volunteer fire departments to centralized control at the municipal level. We find evidence that the amount of manufacturing capital at risk of fire loss played a crucial role in influencing the timing of initial adoptions of this technology. This is consistent with the argument that increased industrialization in large cities was conducive to the growth in capital-intensive firefighting and centralized control of fire departments in urban America during this period.
This paper investigates the efficiency of ski lift companies across different climate zones in a group of countries based on establishment data. By a joint estimation of the stochastic frontier production and efficiency equations, the results indicate that ski areas in subarctic climate zones are far more efficient than their counterparts in warmer zones. Presence of a large local market and elevation of the ski area are factors not relevant for efficiency. Output of ski lift operators (companies) increases with the length of ski runs, number of ski lifts, share of slopes covered by snowmaking facilities and availability of fast lifts. Productivity is also significantly higher for ski lift companies owned by a large conglomerate.
Comparison of the Polish, Czech, and Slovakian ski resorts with the method of hedonic prices Background. The Hedonic Price Method helps develop a hierarchy of ski resorts, where the criterion is the ratio of the ski pass price to the quality of the service. Using a properly selected research sample and the nonlinear estimation method, one can estimate the impact of ski resorts attributes on ski pass prices. The estimated ski pass prices allow to compare the effectiveness of ski resorts in different countries. material and methods. Data for the analysis, relating to the ski season of 2015/2016, were attributes of 245 ski resorts in Poland, the Czech Republic, and Slovakia. The quality index was constructed with the method of hedonic prices and nonlinear least squares estimation. results. The average quality of Polish ski resorts is significantly higher than that of Czech and Slovakian ones. However, prices in the Polish resorts are highest in relation to the offered quality. In Poland, there are the largest number of ski resorts characterized by excessive (in relation to the offered quality) prices of ski passes. conclusions. The features that most strongly affect the price of ski passes in Polish, Czech, and Slovakian ski resorts are: the proportion of fast and modern detachable chairlifts, the upper station altitude, and the ski season duration.
This study applies the hedonic pricing model to lift ticket prices from 2011 for 181 alpine ski areas in the USA. Marginal implicit prices are estimated for a variety of ski area physical characteristics and skier amenities. While controlling for these other attributes, the analysis
also investigates crowding effects in alpine downhill skiing. Increased crowding, approximated by additional skiers per hour per acre, is shown to raise lift ticket prices at first, before exerting a negative impact on lift ticket prices at high levels of crowding. The results provide evidence
for the existence of both agglomeration and congestion effects in downhill skiing and support previous findings of non-linear crowding effects in other outdoor recreation activities.
Using a two-sector model of congestion, I explain theoretically how lower travel costs and increased consumer income over time resulted in endogenous investment in quality and higher real prices at both national and local ski resorts despite limited market entry. I also provide empirical evidence for the US ski industry in support of the implications of the model.
This paper compares the efficiency of large ski resort conglomerates with independent ski resorts using data on four countries (Canada, France, United States, Switzerland). Using the stochastic frontier production approach, I find that ski resorts that are owned and managed by the Intrawest group are significantly more efficient than independent ski resorts. The efficiency gap is about nine percentage points on average. The remaining ski resort conglomerates (American Skiing, Vail Resorts Inc., and Compagnie des Alpes SA) do not operate more efficiently than independent ski resorts. Copyright © 2009 John Wiley & Sons, Ltd.
We apply a hedonic framework to estimate and simulate the impact of global warming on real estate prices near ski resorts in the western United States and Canada. Using data on housing values for selected U.S. Census tracts and individual home sales in four locations, combined with detailed weather data and characteristics of nearby ski resorts, we find precise and consistent estimates of positive snowfall effects on housing values. Simulations based on these estimates reveal substantial heterogeneity in the likely impact of climate change across regions, including large reductions in home prices near resorts where snow reliability already is low.
An important aspect of the study of technological innovations is the explanation of the extent and pace of diffusion. We show that pooling data across vintages of a technology may result in misleading conclusions about the impact of key factors on the duration of time to adoption of the innovation. This is especially important for a technology that affects both product/service quality and a firm's costs of operation to different degrees as the technology evolves over time. Using data on the diffusion of point-of-sale optical scanners between 1974 and 1985, we find that factors such as the stock of prior adopters, household income, family size, the four-firm concentration ratio and item-pricing laws had predictably different effects on the diffusion rate depending on the vintage of the technology. These results are robust to controlling for unobserved heterogeneity among firms, inclusion of additional regressors and a change in functional form.
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
High-tech rivalry typically involves sellers introducing a sequence of models each offering greater capacity/functionality. Given heterogeneous consumers this both creates and erodes any quality/novelty premium as innovation segments the market and imitation then populates the segments so created. We present a hedonic price analysis using a unique US digital camera database. This confirms the intensity of the quality-adjusted price fall and the dominance of vertical differentiation and identifies a premium for frontier models.
In this comment, we show that the existence of the preemption equilibrium in Fudenberg and Tirole (Review of Economics Studies, vol. 52, PP. 383-401, 1985)'s continuous-time games of timing is not guaranteed under their assumptions.
A Generalized CES (GENCES) preference ordering is developed and estimated. It incorporates characteristics of both the individual and the activities. The GENCES is used to explain the share of ski time and individual allocates to each ski area as a function of site characteristics, skiing ability, and costs. The stochastic specification limited the shares to the 0-1 simplex. This specification was found to be more appropriate than the conventional normality assumption. The null hypothesis that preferences are homothetic and additive is rejected. Characteristics, ability, and costs are important determinants of demand. The estimated elasticities provide numerous insights into skier behavior.
The purpose of this research is to present a method of target market selection developed for the downhill skiing industry of Colorado. A two-dimensional system for strategically classifying alternative markets on the basis of existing sales and incremental sales potential is proposed. Using a regression model of Colorado ski visitation, the 205 nonresident areas of dominant influence (ADIs) in the continental United States are classified.
The literature on new technology diffusion is vast, and it spills over many conventional disciplinary boundaries. This paper surveys the literature by focusing on alternative explanations of the dominant stylized fact: that the usage of new technologies over time typically follows an S-curve. The most commonly found model which is used to account for this model is the so-called epidemic model, which builds on the premise that what limits the speed of usage is the lack of information available about the new technology, how to use it and what it does. The leading alternate model is often called the probit model, which follows from the premise that different firms, with different goals and abilities, are likely to want to adopt the new technology at different times. In this model, diffusion occurs as firms of different types gradually adopt it. There are actually many ways to generate an S-curve, and the third class of models which we examine are models of density dependence popularized by population ecologists. In these models, the twin forces of legitimation and competition help to establish new technologies and then ultimately limit their take-up. Finally, we look at models in which the initial choice between different variants of the new technology affect the subsequent diffusion speed of the chosen technology. Such models often rely on information cascades, which drive herd like adoption behaviour when a particular variant is finally selected.
This paper reports the results of a series of two-stage, two-person noncooperative games where one player can strategically preempt the other. In one of our designs, the subgame perfect equilibrium entails complete preemption; in the other, it entails partial preemption. The data show that players tend to completely preempt when it is privately optimal. However, when partial preemption is privately optimal, a non-trivial fraction of players persist in choosing the non-preemptive structure. This may result because of occasional irrational behavior following preemptive play, which induces some dominant agents to play less aggressively.
This study uses monthly data on the adoption of optical scanners by sixty-three grocery chains in thirty-two large U.S. cities to identify the determinants of the rate of intrafirm diffusion. The methodology involves a two-stage approach that relates market environment characteristics to the estimated rate of intrafirm diffusion. The results indicate that firms with larger market shares adopt a new innovation (scanners) more quickly initially but diffuse the innovation through their stores more slowly than firms with smaller market shares. In addition, firms that lag competitors in the initial adoption of scanners tend to diffuse the innovation more quickly. Copyright 1992 by MIT Press.
We investigate the incentives of private firms to adopt new technologies. Econometric investigation is performed on a pooled sample of individual US airline firms over the period 1971 to 1986 for which extensive information on available jet aircraft technology and fleet choice have been recorded. Given the incidence of successive commercial aircraft innovations and variation in production attributes across firms, we are able to consider a wider array of 'time-dependent' and 'time-independent' adoption influences than in previous firm-level studies. To the extent that our study provides useful general insights into adoption decisions by firms, the results have implications for US global competitiveness policy. One key finding is that firms subject to increased product market competition exhibit a higher propensity to adopt technological innovations.
In this article we construct a general duration model of technology adoption that incorporates the main factors discussed in different theories of diffusion of new process technologies. The model is applied to data on diffusion of CNC in the UK engineering industry. Although we find strong evidence in support of rank and endogenous learning effects, there seems to be little evidence in support of the stock and order effects. The main factors affecting the diffusion of CNC are found to be endogenous learning, firm size, industry growth rates, the cost of the technology, and expected changes in the cost of the technology.
This article shows that the diffusion of a capital-embodied process innovation results from a pattern of decreasing incremental benefits and adoption costs for later adoptions. Strategic behavior is inessential to this finding. We develop a method for comparing diffusion rates for different market structures in the capital equipment market. We consider cases with market power on the seller's side of the market and on the buyers' side of the market, a case with no market power, and the welfare-optimal case. We find that a joint venture adopts an innovation more slowly than other market regimes to protect existing capital investments and that the adoption rate is slower than is socially optimal. A monopoly supplier, on the other hand, adopts at a rate faster than is socially optimal. This result is usually also the case when there is no market power. Finally, we show that the monopoly supplier accelerates adoptions faster than in the case where there is no market power, but retards later adoptions. Market power thus makes a difference in diffusion rates, and on which side of the market that power lies makes a considerable difference.
We explore how well the market will provide shared facilities which are subject to congestion. It is usually efficient to have multiple facilities because it is more efficient to spend resources on facilities than to endure crowding costs. We assume firms can charge a membership price and a visit price. We present a symmetric Nash equilibrium in these two prices. We show that if a number of firms is large, the membership price will be small. Thus, the membership price is a measure of market power. When entry occurs in response to positive profit (but such that entry is deterred by the prospect of negative profit in a symmetric Nash equilibrium), the endogenous number of firms is bounded below by one fewer than the efficient number. The fees paid by a client converge to an appropriately defined competitive price as the economy is replicated.
This article shows that if the value of adopting a cost-reducing, capital-embodied process innovation declines with the number of firms which have already adopted it, then the firms adopt the new technology in sequence so that it is "diffused" into the industry over time. This diffusion is due purely to strategic behavior; firms are assumed to be identical and information regarding the value of the innovation is perfect. Furthermore, this phenomenon persists even in the limiting case of infinitely many firms.
The market for ski runs or amusement rides often features lump-sum admission tickets with no explicit price per ride. Therefore, the equation of the demand for rides to the supply involves queues, which are systematically longer during peak periods, such as weekends. Moreover, the prices of admission tickets are much less responsive than the length of queues to variations in demand, even when these variations are predictable. We show that this method of pricing generates nearly efficient outcomes under plausible conditions. In particular, the existence of queues and the "stickiness" of prices do not necessarily mean that rides are allocated improperly or that firms choose inefficient levels of investment. We then draw an analogy between "ski-lift pricing" and the use of profit-sharing schemes in the labor market. Although firms face explicit marginal costs of labor that are sticky and less than workers' reservation wages, and although the pool of profits seems to create a common-property problem for workers, this method of pricing can approximate the competitive outcomes for employment and total labor compensation.
This paper provides a formal attempt to separate the effects of changes in scale and technology for a relatively general class of queuing models. The paper makes a distinction between the output rate and capacity. While changes in technology affect the output rate and lead to larger, indivisible production units, this change in the output rate has often been confused in the literature as a change in scale. As a result, the importance of scale economies claimed has often been due more to the potential for technological change, not the potential for scale economies inherent to these queuing processes.
This paper examines excess-capacity barriers to entry and investment dynamics in a sample of thirty-eight chemical product industries. Logit and log-linear models of investment behavior are estimated, and specific case examples are considered. The results show that incumbents rarely built excess capacity ereemptively in an effort to deter entry. In general, entrants and incumbents exhibited similar investment behavior. Copyright 1987 by Blackwell Publishing Ltd.
We study the adoption of a new technology to illustrate the effects of preemption in games of timing. We show that the threat
of preemption equalizes rents in a duopoly, but that this result does not extend to the general oligopoly game. If the gain
to preemption is sufficiently small, then the optimal symmetric outcome, which involves “late” adoption, is an equilibrium.
This contrasts with Reinganum's result that in precommitment equilibria there must be “diffusion”. We develop a new and richer
formalism for modeling games of timing, which permits a continuous-time representation of the limit of discrete-time mixed-strategy
equilibria.
This paper concentrates on the contextual diffusion of flexible automation production and design/engineering technologies in the Italian metalworking industry. The authors use duration data analysis with explanatory covariates to point out the role of complementarities between the technologies examined and learning by using effects matured with experience of previously available technologies in shaping diffusion paths. The impact of industry- and plant-specific control variables, as well as that of the stock of previous adopters, on adoption probabilities is also taken into account. In addition, the authors analyze duration versus calendar time dependence of adoption probabilities. Copyright 1995 by Blackwell Publishing Ltd.
This paper explores a dynamic model of product innovation, extending the work of Dutta, Lach, and Rustichini (1995). It is shown that if R&D costs for quality improvements are low, the dynamic competition is structured as a race for being the pioneer firm with payoff equalization in equilibrium, but switches to a waiting game with a second-mover advantage in equilibrium if R&D costs are high. Moreover, the second-mover advantage increases monotonically as R&D becomes more costly. Copyright (c) 2001 Massachusetts Institute of Technology.
This study employs information on the adoption of automatic teller machines by banking firms to examine the nature of firm reactions to rival precedence in the adoption process Using a failure-time estimation procedure, it is found that the ado ption of this innovation by rivals increases the conditional probabil ity that a decision to adopt will be made. The effect of spillovers f rom technology adoption and the interaction of market concentration a nd rival precedence are also investigated. Finally, the study shows w ith an example how the estimation procedure may be used to test the u nderpinnings of diffusion processes. Copyright 1987 by The Review of Economic Studies Limited.
This study is part of a continuing program of research into the performance of economic infrastructure industries, which was commenced by the Bureau of Industry Economics. It is the third Waterfront Benchmarking report in the cycle. The study builds on the two previous waterfront studies by providing new insights into timeliness, reliability and the economic consequences of failure to match levels of performance achieved overseas. It is based on data collected throughout 1997.
Slope and Slide (Decline in Popularity of Alpine Skiing
- Cravatta
- Matthew
Cravatta, Matthew, “Slope and Slide (Decline in Popularity of Alpine Skiing),” American Demographics 19 (1997), 34
National End of the Season Survey
- Marvin Kottke
Kottke, Marvin, National End of the Season Survey, 1993/4, (Lakewood,
CO, National Ski Areas Association, 1994).
Peak-Load Pricing, Congestion , and Multiple Capacity Constraints with an Application to Down-Hill Skiing
- James G Mulligan
- Emmanuel Llinares
Mulligan, James G., and Emmanuel Llinares, " Peak-Load Pricing, Congestion, and Multiple Capacity Constraints with an Application to
Down-Hill Skiing, " University of Delaware Working Paper, 2002.
- John Sutton
Sutton, John, Technology and Market Structure (Cambridge, MA: MIT
Press, 1998).
White Book of Ski Areas
- Robert G Enzel
Enzel, Robert G., White Book of Ski Areas (Washington, DC: Interski
Services, 1980–1998 editions).