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This study employs information on the adoption of automatic teller machines by banking firms to examine the nature of firm reactions to rival precedence in the adoption process Using a failure-time estimation procedure, it is found that the ado ption of this innovation by rivals increases the conditional probabil ity that a decision to adopt will be made. The effect of spillovers f rom technology adoption and the interaction of market concentration a nd rival precedence are also investigated. Finally, the study shows w ith an example how the estimation procedure may be used to test the u nderpinnings of diffusion processes. Copyright 1987 by The Review of Economic Studies Limited.
Hannan et al. (Fri,) studied this question.