Vintage Effects and the Diffusion of Time-Saving Technological Innovations

Abstract

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.

Government Intervention to Prevent Bankruptcy: The Effect of Blind‐bidding Laws on Movie Theaters

“…As in the case of the movie industry, some states initially attempted to impede endogenous quality‐enhancing investment in supermarket quality. Using data from 1974 to 1985, Das, Falaris, and Mulligan (2009) show that as supermarkets made endogenous quality‐enhancing investments in the first vintages of optical scanner technology in the late 1970s and early 1980s, six states passed laws requiring that prices be placed on each individual item sold in grocery stores. While these laws were intended to save jobs, they slowed down the diffusion of scanner technology at a time when stores were starting to install computers linked to the scanner technology.…”

“…As in the case of the movie industry, some states initially attempted to impede endogenous quality-enhancing investment in supermarket quality. Using data from 1974 to 1985, Das, Falaris, and Mulligan (2009) show that as supermarkets made endogenous quality-enhancing investments in the first vintages of optical scanner technology in the late 1970s and early 1980s, 24. Our results are also relevant to a growing related literature on how quality and product differentiation decisions can affect exit and entry (Toivanen and Waterson 2005).…”

Raising the Barcode Scanner: Technology and Productivity in the Retail Sector

“…This paper builds on a small literature on scanner installations. Levin, Levin, and Meisel (1985, 1987, 1992 and Das, Falaris, and Mulligan (2009) have used different subsets of the scanner installation data to study, respectively, the reasons for variable early diffusion rates across U.S. metropolitan areas, the role of market concentration and firm size in scanner adoption, differences in the speed of intra-firm diffusion across supermarket chains, and changes in the diffusion process with the emergence of new vintages of the technology. Beck, Grajek, and Wey (2011) use aggregate data on scanner adoption in ten European countries to estimate country-specific diffusion parameters and relate them to the structure of the retail market in each country.…”

“…In January 1985 the publication Marketing News reported that 29% of supermarkets in the U.S. were using the technology (reported in Das, Falaris, and Mulligan, 2009). Figure 1 shows the timeline of scanner installations based on the FMI data; by the end of 1984, more than 10,000 supermarkets had installed scanners.…”

“…Scanners improved over time. The main improvements in scanning technology before the mid-1980s were, first, an increase in scanners' ability to read small bar codes, and second, the introduction of a holographic technique that allowed optical scanning of damaged or wet barcodes (Das, Falaris, and Mulligan, 2009). These innovations, combined with a general trend of increasing UPC adoption by food manufacturers, resulted in better UPC coverage across the food sector.…”