In this paper, we introduce adoption costs in a canonical vintage capital model. Adoption costs take the form of a direct loss in production during a fixed period of time. We explicitly characterize the optimal machine replacement policy as a function of the adoption period. Using an explicit...

In recent years, enormous changes are noted worldwide when broad adoption of new Information and Communication Technologies (ICTs). These unique technologies – often perceived as economic development incentives – have a great ability to spread at high pace and low cost in world countries,...