The Timing of New Technology Adoption: The Case of MRI

ABSTRACT This paper studies the adoption of nuclear magnetic resonance imaging (MRI) by US hospitals. I consider a timing game of new technology adoption. The dynamic game takes timing decisions and strategic interaction into account. Using a panel data set of US hospitals, cross sectional variation in adoption times, market structure and demand is exploited to recover the profit and cost parameters. In counterfactuals, I quantify to what extent the timing of adoption is caused by a preemptive motive. I find a small but significant effect of preemptive motives, which are weakened by firm asymmetry.