IMPACT OF OPERATING COSTS ON INVESTMENT STRATEGIES IN NEW TECHNOLOGY ADOPTION WITH A FURTHER NEW TECHNOLOGY ANTICIPATED

. The adoption of new technologies often represents a crucial component of firms’ investment decisions.This paper studies a dynamic duopoly model in which two firms compete in adoption of current technology with a further new technology anticipated.Here it is assumed that the operating costs are not zero which has more explanatory power of the real world.There exist three kinds of equilibria that may occur in adoption of current technology,which mainly depends on the level of operating costs and the first-move advantage.It shows that the faster technological substitution or innovation encourages the leader to invest earlier while induces the follower to invest later.Furthermore,like the investment costs,with the increase of operating costs the follower tends to invest later while the leader tends to invest earlier,the investment thresholds are more sensitive to the change of operating costs than that of investment costs.