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Technology Revolutions and the Gestation of the New Technologies

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  • Chou, Chien-Fu
  • Shy, Oz

Abstract

We formalize Schumpeter's explanation of technological progress and growth cycles in a model where consumers and firms benefit from periodic changes in technology which result in the development and marketing of new generations of products. We develop a genera/ equilibrium dynamic differentiated products model in order to explain technological progress via cyclical changes in investment, output, and interest rates as well as the introduction of new products. We characterize the equilibrium and analyze the effect of changes in the rate of technology growth, resource endowment, and costs of REM and production on the duration of generations of products and the frequency of technology revolutions, and hence of growth cycles.

Suggested Citation

  • Chou, Chien-Fu & Shy, Oz, 1991. "Technology Revolutions and the Gestation of the New Technologies," Foerder Institute for Economic Research Working Papers 275513, Tel-Aviv University > Foerder Institute for Economic Research.
    • Handle: RePEc:ags:isfiwp:275513
    DOI: 10.22004/ag.econ.275513
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    References listed on IDEAS

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    1. Costas Azariadis & Roger Guesnerie, 1986. "Sunspots and Cycles," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(5), pages 725-737.
    2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    3. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
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    Cited by:

    1. Oz Shy, 2011. "A Short Survey of Network Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(2), pages 119-149, March.
    2. Walde, Klaus, 2002. "The economic determinants of technology shocks in a real business cycle model," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 1-28, November.
    3. Sumit Sarkar, 2005. "Patent Licensing By A Standard Auction In The Presence Of Network Externality," Manchester School, University of Manchester, vol. 73(2), pages 228-245, March.
    4. Shy, Oz, 1996. "Technology revolutions in the presence of network externalities," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 785-800, October.
    5. Justman, Moshe, 2004. "Transitional dynamics of output, wages and profits in innovation-led growth: a general equilibrium analysis," Structural Change and Economic Dynamics, Elsevier, vol. 15(2), pages 183-205, June.

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