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Learning and Technology Adoptions

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  • Scholz, Sebastian

Abstract

A government that wants to increase welfare by subsidizing either an industry’s sales or process innovations or both has to account for possible changes of production, when firms can foresee the government’s actions. In an optimal control framework welfare can be increased by subsidizing either an industry’s sales or process innovations. An earlier innovation date increases the price that is charged up to that innovation date, but decreases it afterwards, when process innovation costs depend on the date of innovation. Hence the welfare effect might be negative. This paper will be the first that sets up a framework, which helps to examine the optimal mixture of sales and innovation subsidies, where innovation costs depend on time and learning on cumulative production quantities. The process innovation can be understood as a substitute to learning. In this set up innovation subsidies are more beneficial for the monopolist, sales subsidies for consumers.

Suggested Citation

  • Scholz, Sebastian, 2008. "Learning and Technology Adoptions," Discussion Papers in Economics 7575, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenec:7575
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    References listed on IDEAS

    as
    1. Parente Stephen L., 1994. "Technology Adoption, Learning-by-Doing, and Economic Growth," Journal of Economic Theory, Elsevier, vol. 63(2), pages 346-369, August.
    2. Tracy R. Lewis & Huseyin Yildirim, 2002. "Learning by Doing and Dynamic Regulation," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 22-36, Spring.
    3. Christopher Harris & John Vickers, 1987. "Racing with Uncertainty," Review of Economic Studies, Oxford University Press, vol. 54(1), pages 1-21.
    4. Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-472, June.
    5. Irwin, Douglas A & Klenow, Peter J, 1994. "Learning-by-Doing Spillovers in the Semiconductor Industry," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1200-1227, December.
    6. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
    7. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
    8. Drew Fudenberg & Jean Tirole, 1983. "Learning-by-Doing and Market Performance," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 522-530, Autumn.
    9. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 369-405.
    10. Ray Rees, 1986. "Indivisibilities, pricing and investment: The case of the second best," Journal of Economics, Springer, vol. 5(1), pages 195-210, December.
    11. Ray Rees, 1986. "Indivisibilities, pricing and investment: The case of the second best," Journal of Economics, Springer, vol. 46(1), pages 195-210, December.
    12. Brueckner, Jan K. & Raymon, Neil, 1983. "Optimal production with learning by doing," Journal of Economic Dynamics and Control, Elsevier, vol. 6(1), pages 127-135, September.
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    More about this item

    Keywords

    Process Innovation; Timing; Learning-by-Doing;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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