This article explains the importance of contracts and the relation to technology adoption and overall productivity. \r
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There is widespread agreement that differences in technology are a major source of productivity differences across firms, industries,and nations. Despite this widespread agreement, we are far from an established framework\r
for the analysis of technology choices of firms. \r
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In this paper, we take a step in this direction and develop a simple model to study the impact of contracting institutions, which regulate the relationship between the firm and its suppliers, on technology choices.
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