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Technological Innovations: Slumps and Booms

Author

Listed:
  • Leonardo Felli

    (London School of Economics)

  • Francois Ortalo-Magne

    (London School of Economics & CEPR)

Abstract

This paper documents the delayed adoption of a major technological innovation: the adoption of the diesel locomotive in the US railway industry. Contrary to other instances of major technological innovations, the delay in the adoption of the diesel locomotive was not associated with an initial slump in output. We provide a theoretical model which is consistent with both an increase and a decrease in output following the invention of a new technology. Within this model we identify the key factors that make a slump in output unlikely.

Suggested Citation

  • Leonardo Felli & Francois Ortalo-Magne, 1997. "Technological Innovations: Slumps and Booms," Microeconomics 9711002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpmi:9711002
    Note: Type of Document - LaTex; prepared on IBM PC - EmTex; to print on PostScript; pages: 25 ; figures: separate but included
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    References listed on IDEAS

    as
    1. David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-361, May.
    2. Jovanovic, Boyan & MacDonald, Glenn M, 1994. "Competitive Diffusion," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 24-52, February.
    3. Helpman, Elhanan & Trajtenberg, Manuel, 1994. "A Time to Sow and a Time to Reap: Growth Based on General Purpose Technologies," CEPR Discussion Papers 1080, C.E.P.R. Discussion Papers.
    4. Chari, V V & Hopenhayn, Hugo, 1991. "Vintage Human Capital, Growth, and the Diffusion of New Technology," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1142-1165, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Aruga, Osamu, 2007. "Conventional or New? Optimal Investment Allocation across Vintages of Technology," MPRA Paper 6043, University Library of Munich, Germany.
    2. Rodolfo E. Manuelli & Ananth Seshadri, 2014. "Frictionless Technology Diffusion: The Case of Tractors," American Economic Review, American Economic Association, vol. 104(4), pages 1368-1391, April.

    More about this item

    Keywords

    technological innovations; locomotives; slumps; learning-by- doing;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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