The Technology Adoption Model with RD

摘要

Research and development(R&D) and technology adoption are two important parts in technology innovation decision. Lee(1985) is the first paper that addresses the technology adoption model with R&D, in which a Markov decision process(MDP) model is constructed, and the optimal policy is obtained. In this paper, we illustrate that Lee's optimal policy is not correct, and also a new optimal policy is obtained: it's optimal to do R&D if the best available technology level is low; it's optimal to adopt the best available technology if the best available technology level is relative high to the used technology level.