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The paper contains a theoretical and empirical analysis of the driving forces behind the diffusion of dry chemical laboratory equipment in Norwegian primary health care. The empirical analysis is embedded in a theoretical model of a dynamic investment problem focusing on heterogeneity in the potential adopters' profit functions. The empirical analysis indicates that most adopters are too late in adopting the new technology. A logit analysis of the diffusion process lends some support to the notion that profit function heterogeneity influences the diffusion process. An offspin of the empirical analysis is information on the reimbursement system, indicating that this system does not promote efficient resource allocation in the sector.