We consider a model explaining the emergence of asymmetric productive structures among different regions based on the adoption of a quality improving technology. Firms' products are differentiated both in location and quality, location is given. We characterize both symmetric and asymmetric equilibria of the two stage game in price and adoption decisions. Asymmetric equilibria display partial adoption frequencies and regular, geographical patterns of adoptions. The degree of asymmetry of the economy has, under fairly general conditions a reversed U shaped relation with the size of the innovation.
Market integration is an obstacle for the full adoption of the new technology.