This paper explores how vertical relations influence the timing of new technology adop- tion. It shows that both the bargaining power distribution among the vertically related firms and the contract type through which vertical trading is conducted affect crucially the speed of adoption: the downstream firms can adopt later a new technology when the upstream bargaining power increases as well as when wholesale price contracts, instead of two-part tariffs, are employed.
We study competing vertical chains where upstream and downstream firms bargain over their form and terms of trading.
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