Department of Economics

University of Delaware

Working Paper #2006-11

Item Pricing Laws, Supplier Behavior, and the Diffusion of Time-Saving Technology Innovations

James G. Mulligan and Nilotpal Das

ABSTRACT

In this paper we provide non-parametric and parametric estimations of the initial diffusion process of point-of-sale optical scanners that illustrate the importance of controlling for supplier behavior and government regulations.  In particular, we show that discrete changes in the early development of the technology followed predictably different diffusion paths depending on each vintage’s relative effect on service speed and costs of production. We also provide evidence that item-pricing laws passed in six states as consumer protection initiatives slowed down the initial diffusion of the technology at the same time as consumer acceptance of scanners was growing nation-wide.

JEL CODES: O3 and L8