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Frictionless technology diffusion: the case of tractors

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  • Rodolfo E. Manuelli
  • Ananth Seshadri

Abstract

Empirical evidence suggests that there is a long lag between the time a new technology is introduced and the time at which it is widely adopted. The conventional wisdom is that this fact is inconsistent with the predictions of the frictionless neoclassical model. In this paper we study the specific case of the diffusion of the tractor in American agriculture between 1910 and 1960. There are three important driving forces: changes in quality, wage rates and prices of substitutes such as horses and mules. We demonstrate that once these exogenous forces are taken into account, the standard neoclassical model can account for ”slow” pattern of adoption of tractors that took more than 50 years.

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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2013-022.

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Date of creation: 2013
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Handle: RePEc:fip:fedlwp:2013-022

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Keywords: Technology - Economic aspects;

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