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Frictionless Technology Diffusion: The Case of Tractors

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  • Rodolfo 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 these observations are inconsistent with the predictions of the frictionless neoclassical model. In this paper we show this to be incorrect. Once the appropriate driving forces are taken into account, the neoclassical model can account for slow' adoption. We illustrate this by developing an industry model to study the equilibrium rate of diffusion of tractors in the U.S. between 1910 and 1960.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9604.

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Date of creation: Apr 2003
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Handle: RePEc:nbr:nberwo:9604

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