Learning and Technology Adoptions
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.
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|Date of creation:||31 Oct 2008|
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- Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-72, June.
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- Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May.
- 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.
- Ray Rees, 1986. "Indivisibilities, pricing and investment: The case of the second best," Journal of Economics, Springer, vol. 5(1), pages 195-210, December.
- Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
- 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.
- Harris, Christopher & Vickers, John, 1987. "Racing with Uncertainty," Review of Economic Studies, Wiley Blackwell, vol. 54(1), pages 1-21, January.
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