This paper analyses the incentives to adopt cost-reducing technology by firms in a horizontally differentiated industry. In our model there are several suppliers of a new technology. The extent of the cost reduction depends on the quality of the new technology. A firm has to buy the technology...

We consider a two good world where an individual i with income mi has utility function u(x,y), where x belongs to [0,infinity) and y belongs {0,1}. We first derive the valuation (maximum price that he is willing to pay for the object) for good y as a function of his income. Then we consider the...