|Underlying assumption of this diffusion matrix is that adoption costs of XML/EDI are assumed to be falling over time. Diffusion is assumed to be sequential rather than simultaneous. There are two reasons for this assumption. Potential users of a new technology may differ in a way that the expected returns from adoption are different due to firm size, market share, R&D expenditure, etc. Differences in prior believes [sic] about the ‘true’ profitability of a new technology [may result in different expected benefits from adoption and therefore in distinct adoption dates.]
||Adoption costs are assumed to be falling over time. Diffusion, i.e., sequential rather than simultaneous adoption by individual firms, may result for two reasons.
(i) Rank effects: the potential users differ with respect to the (expected) returns from adoption. The reasons arc differences in firm size, R&D expenditures, market
shares (see Karshenas and Stoneman, 1993, 1995), or even the prior beliefs about the profitability of a new technology (see Jensen, 1982).
JENSEN, R. "Adoption and Diffusion of an Innovation of Uncertain Profitability," Journal of Economic Theory, Vol. 27 (1982), pp. 182-193.
KARSHENAS, M. AND STOREMAN, P.L. "Rank, Stock, Order, and Epidemic Effects in the Diffusion of New Process Technologies: An Empirical Model", RAND Journal of Economics, Vol. 24 (1993), pp. 503-528.
______ AND ______ "Technological Diffusion." In P. Stoneman, ed., Handbook of the Economics of Innovation and Technological Change. Cambridge, Mass.: Blackwell, 1995.