Learning-by-doing and the choice of technology: the role of patience
AbstractJovanovic and Nyarko (1996) showed that when agents learn-by-doing and are myopic, less advanced agents may adopt new technologies while more advanced firms stick with the old technology since the new technology takes time to learn. In this case, the less advanced agents might eventually overtake (or "leapfrog") the advanced agents. We show that this kind of overtaking can also occur if agents are forward looking and have high discount rates. However, if agents are sufficiently patient, overtaking cannot occur. A lower discount rate increases the set of states at which agents adopt new technologies, so more patient agents tend to upgrade their technology more frequently.
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Bibliographic InfoPaper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 9810.
Date of creation: 01 Jan 1998
Date of revision:
Other versions of this item:
- Karp, Larry & Lee, In Ho, 2001. "Learning-by-Doing and the Choice of Technology: The Role of Patience," Journal of Economic Theory, Elsevier, vol. 100(1), pages 73-92, September.
- Karp, Larry & Lee, In Ho, 2000. "Learning-by-Doing and the Choice of Technology: the Role of Patience," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4vh9x271, Department of Agricultural & Resource Economics, UC Berkeley.
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