Research Seminar MicroeconomicsThe Dynamics of Technology Adoption and Vertical Restraints: An Empirical AnalysisMichelle Sovinsky, University of Mannheim, 17:00–19:00, Room 0029 (VMP 5)
20 October 2016
Michelle Sovinsky, University of Mannheim, 17:00–19:00, Room 0029 (VMP 5)
Abstract:
This paper studies the impact of vertical restraints in the x86 processor industry, where a dominant upstream supplier (Intel) competes with a smaller contender, Advanced Micro Devices (AMD). During the studied period, Intel’s strategy included a controversial program, “Intel Inside”, through which it offered downstream clients rebates and subsidies that were conditioned on the volume purchased from it and, sometimes, on the volume purchased from AMD. We document the manner by which such restraints interact with the dynamic process of downstream technology adoption. Our preliminary results indicate, first, that Intel’s restraints were binding: restrictions imposed on a downstream client reduced the rate of its AMD adoption. They also illustrate the role played by dynamics and downstream clients’ expectations: we find that (i) adoption of the AMD technology by a given downstream firm was negatively affected by restrictions imposed on other downstream firms, and that (ii) adoption was an increasing function of the intensity of antitrust litigation against Intel.
You can find the paper here: Link