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Resistance to new technology and trade between areas


  • Thomas J. Holmes
  • James A. Schmitz


Historically, competition, or the extension of markets, has repeatedly brought tremendous increases in wealth. However, there is still plenty of uncertainty among economists as to why that is so. This article develops a model in which competition, modeled as the movement of goods between two areas, reduces resistance to new technology and, hence, leads to increased technology adoption and wealth. Here, the extension of markets leads to wealth increases because it reduces activities that block the use of new, more productive technology.

Suggested Citation

  • Thomas J. Holmes & James A. Schmitz, 1995. "Resistance to new technology and trade between areas," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-17.
  • Handle: RePEc:fip:fedmqr:y:1995:i:win:p:2-17:n:v.19no.1

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    References listed on IDEAS

    1. Per Krusell & José-Víctor Ríos-Rull, 1996. "Vested Interests in a Positive Theory of Stagnation and Growth," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 301-329.
    2. Stephen L. Parente & Edward C. Prescott, 1993. "Changes in the wealth of nations," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-16.
    3. Romer, Paul, 1994. "New goods, old theory, and the welfare costs of trade restrictions," Journal of Development Economics, Elsevier, vol. 43(1), pages 5-38, February.
    4. Bruce W. Marion & Robert L. Wills, 1990. "A Prospective Assessment of the Impacts of Bovine Somatotropin: A Case Study of Wisconsin," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(2), pages 326-336.
    5. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    6. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    7. Sharon M. Oster & John M. Quigley, 1977. "Regulatory Barriers to the Diffusion of Innovation: Some Evidence from Building Codes," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 361-377, Autumn.
    8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Free trade ; Technology;


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