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For Sale: Barriers to Riches

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Abstract

This paper formallizes stories linking vested interests to the non- adoption of superior technologies. Coalitions of workers skilled in the operation of incumbent technologies lobby government for a prohibition on the adoption of better technologies. For reasonable parameter values, we find that the model generates significant levels of protection in equilibrium. The model also generates protection cycles that lead to TFP growth cycles. Protection has a level effect on per capita output. "Productivity slowdowns" lead to increased levels of protection. The level of protection is increasing in the venality of governments. Increased population growth rates increase the value of protection, and can lead to an increase in the level of protection.

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Bibliographic Info

Paper provided by University of Western Ontario, Economic Policy Research Institute in its series University of Western Ontario, Economic Policy Research Institute Working Papers with number 20043.

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Date of creation: 2004
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Handle: RePEc:uwo:epuwoc:20043

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Postal: Economic Policy Research Institute, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Phone: 519-661-2111 Ext.85244
Web page: http://economics.uwo.ca/research/research_papers/epri_workingpapers.html

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Keywords: vested interests; technology adoption; barriers;

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References

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  1. Simeon Djankov & Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer, . "The Regulation of Entry," Working Paper 19462, Harvard University OpenScholar.
  2. Stephen L. Parente & Edward C. Prescott, 1997. "Monopoly rights: a barrier to riches," Staff Report 236, Federal Reserve Bank of Minneapolis.
  3. Giorgio Bellettini & Gianmarco I.P. Ottaviano, 2003. "Special Interests and Technological Change," Working Papers 2003.59, Fondazione Eni Enrico Mattei.
  4. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  5. Kelley, Allen C, 1988. "Economic Consequences of Population Change in the Third World," Journal of Economic Literature, American Economic Association, vol. 26(4), pages 1685-1728, December.
  6. Thomas J. Holmes & James A. Schmitz, Jr., 1994. "Resistance to technology and trade between areas," Staff Report 184, Federal Reserve Bank of Minneapolis.
  7. Bridgman, Benjamin R. & Livshits, Igor D. & MacGee, James C., 2007. "Vested interests and technology adoption," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 649-666, April.
  8. Pritchett, Lant, 1998. "Patterns of economic growth : hills, plateaus, mountains, and plains," Policy Research Working Paper Series 1947, The World Bank.
  9. Thomas J. Holmes & James A. Schmitz, Jr., 1995. "Resistance to new technology and trade between areas," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-17.
  10. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  11. Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, December.
  12. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-50, September.
  13. Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
  14. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
  15. Krusell, P. & Rios-Rull, J.V., 1993. "Vested Interests in a Positive Theory of Stagnation and Growth," Papers 547, Stockholm - International Economic Studies.
  16. Chari, V V & Hopenhayn, Hugo, 1991. "Vintage Human Capital, Growth, and the Diffusion of New Technology," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1142-65, December.
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Citations

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Cited by:
  1. Daniel Brou & Michele Ruta, 2007. "Rent Seeking, Market Structure and Growth," Economics Working Papers ECO2007/03, European University Institute.
  2. Bridgman, Benjamin R. & Livshits, Igor D. & MacGee, James C., 2007. "Vested interests and technology adoption," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 649-666, April.
  3. Harold L. Cole & Lee E. Ohanian & Alvaro Riascos & James A. Schmitz, Jr., 2006. "Latin America in the rearview mirror," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sep.
  4. Tasso Adamopoulos, 2008. "Land Inequality and the Transition to Modern Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 257-282, April.
  5. Tuna Dinç, 2012. "The Two Sector Model of Learning-By Doing and Productivity Differences," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(5), pages 583-598, December.
  6. Stephen L. Parente & Edward C. Prescott, 2004. "A unified theory of the evolution of international income levels," Staff Report 333, Federal Reserve Bank of Minneapolis.
  7. Igor D. Livshits & James C. MacGee, 2008. "Barriers to Technology Adoption and Entry," University of Western Ontario, Economic Policy Research Institute Working Papers 20087, University of Western Ontario, Economic Policy Research Institute.
  8. James M. Boughton & Alex Mourmouras, 2002. "Is Policy Ownership An Operational Concept?," IMF Working Papers 02/72, International Monetary Fund.
  9. Toshihiko Mukoyama & Latchezar Popov, 2014. "The Political Economy of Entry Barriers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(3), pages 383-416, July.

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