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The diffusion of new technology: adoption subsidies, spillovers, and transaction costs


  • Chokri Dridi

    () (University of Alberta)

  • Naceur Khraief

    () (Université de Sousse)


We establish the relation between optimal subsidy rates and spillovers from the sequential adoption of a new technology, we find that they evolve in the same direction over time. We show that spillovers, hence the subsidy rates, need not be monotonic. We show that when subsidy rates are increasing, their growth rate has to be paced by the growth rate of the present cost of the adoption of the new technology. We also show that increasing subsidies rates cannot produce the desired effect of accelerating adoption if the social cost of public funds is relatively high; hence first-best subsidy adoptions are not always viable.

Suggested Citation

  • Chokri Dridi & Naceur Khraief, 2011. "The diffusion of new technology: adoption subsidies, spillovers, and transaction costs," Economics Bulletin, AccessEcon, vol. 31(1), pages 771-781.
  • Handle: RePEc:ebl:ecbull:eb-10-00289

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    Adoption subsidies; Adoption spillovers; Technology adoption; Technology diffusion.;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue


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