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Time-to-build, obsolescence and the technological paradox

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  • Patriarca, Fabrizio

Abstract

The paper focusses on the technological paradox. To analyze the possible temporary negative effect of an innovation we make use of a flow representation of production. Our aim is to show that such phenomenon can be justified by a simple property of the production process: in real time costs strictly come before proceeds. Moving in the same direction of Amendola (1972), and extending an overlooked result in Belloc (1980), we analyze the obsolescence effect induced by a rise in the interest rate. Furthermore, we analyze the role of capital market stickiness on the timing of the technological paradox and on the distribution of the obsolescence effect among the different stages of a vertical integrated production system.

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Bibliographic Info

Article provided by Elsevier in its journal Structural Change and Economic Dynamics.

Volume (Year): 23 (2012)
Issue (Month): 1 ()
Pages: 1-10

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Handle: RePEc:eee:streco:v:23:y:2012:i:1:p:1-10

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Web page: http://www.elsevier.com/locate/inca/525148

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Keywords: Technological paradox; Technology adoption; Time-to-build; Obsolescence;

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  1. Hicks, J R, 1970. "A Neo-Austrian Growth Theory," Economic Journal, Royal Economic Society, vol. 80(318), pages 257-81, June.
  2. Zamagni, Stefano, 1984. "Ricardo and Hayek Effects in a Fixwage Model of Traverse," Oxford Economic Papers, Oxford University Press, vol. 36(0), pages 135-51, Supplemen.
  3. Hicks, J. R., 1987. "Capital and Time: A Neo-Austrian Theory," OUP Catalogue, Oxford University Press, number 9780198772866, September.
  4. Mehmet Yorukoglu, 1998. "The Information Technology Productivity Paradox," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 551-592, April.
  5. Jeffrey Campbell, 1998. "Entry, Exit, Embodied Technology, and Business Cycles," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 371-408, April.
  6. Amendola, Mario & Gaffard, Jean-Luc, 1998. "Out of Equilibrium," OUP Catalogue, Oxford University Press, number 9780198293804, September.
  7. Roberto Violi, 1985. "Sentiero di traversa e convergenza," Working Papers 14, Dipartimento Scienze Economiche, Universita' di Bologna.
  8. Nardini, Franco, 1990. "Cycle-trend dynamics in a fixwage neo-Austrian model of traverse," Structural Change and Economic Dynamics, Elsevier, vol. 1(1), pages 165-194, June.
  9. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
  10. Dmitriy Stolyarov & Boyan Jovanovic, 2000. "Optimal Adoption of Complementary Technologies," American Economic Review, American Economic Association, vol. 90(1), pages 15-29, March.
  11. Nardini, Franco, 1993. "Traverse and convergence in the neo-Austrian model: The case of a distributive shock," Structural Change and Economic Dynamics, Elsevier, vol. 4(1), pages 105-125, June.
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Cited by:
  1. Mario Amendola & Jean-Luc Gaffard, 2009. "Revisiting the ‘machinery effect’: from Ricardo to Hicks and ahead," Documents de Travail de l'OFCE 2009-13, Observatoire Francais des Conjonctures Economiques (OFCE).
  2. Fabrizio Patriarca & Claudio Sardoni, 2014. "Growth with Unused Capacity and Endogenous Depreciation," Economics Working Paper Archive wp_795, Levy Economics Institute.

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