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Price-Conditional Technology

Author

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  • Lilyan E. Fulginiti

Abstract

Economic theorists for years have considered the possibility that the direction of technical change is altered by changes in relative prices. Prices have also been identified as one of the determinants of technical change through innovation. This paper extends the theory of the firm to cover situations in which the firm's technology set is conditional on expected prices. The basic idea is to distinguish between "market prices," or the prices that guide the firm's choices subject to the technology that is in place, and "normal prices," the prices conditioning the choice of technology. A "generalized" price effect is obtained that includes the traditional price effect as well as the technical change effect of price changes and an example is presented.

Suggested Citation

  • Lilyan E. Fulginiti, 1993. "Price-Conditional Technology," Center for Agricultural and Rural Development (CARD) Publications 93-wp116, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  • Handle: RePEc:ias:cpaper:93-wp116
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    References listed on IDEAS

    as
    1. Fulginiti, Lilyan E & Perrin, Richard K, 1993. "Prices and Productivity in Agriculture," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 471-482, August.
    2. R. E. Lucas, 1967. "Tests of a Capital-Theoretic Model of Technological Change," Review of Economic Studies, Oxford University Press, vol. 34(2), pages 175-189.
    3. Chris Fawson & C. Richard Shumway & Robert L. Basmann, 1990. "Agricultural Production Technologies with Systematic and Stochastic Technical Change," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(1), pages 182-199.
    4. Basmann, R. L. & Hayes, K. J. & Slottje, D. J. & Molina, D. J., 1987. "A new method for measuring technological change," Economics Letters, Elsevier, vol. 25(4), pages 329-333.
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    Cited by:

    1. Riaz, Khalid, 1994. "Food consumption patterns in rural Pakistan," ISU General Staff Papers 1994010108000011501, Iowa State University, Department of Economics.
    2. Ludo Peeters & Yves Surry, 2000. "Incorporating Price-Induced Innovation in a Symmetric Generalised McFadden Cost Function with Several Outputs," Journal of Productivity Analysis, Springer, vol. 14(1), pages 53-70, July.
    3. Roberto Esposti & Pierpaolo Pierani, 2008. "Price-induced technical progress in Italian agriculture," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 89(4), pages 5-28.
    4. Paris, Quirino & Caputo, Michael R., 1995. "The Rhetoric Of Duality," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(01), July.
    5. Lilyan E. Fulginiti & Richard K. Perrin, 1999. "Have Price Policies Damaged Ldc Agricultural Productivity?," Contemporary Economic Policy, Western Economic Association International, vol. 17(4), pages 469-475, October.

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