Costly Technology Adoption and Capital Accumulation

Aubhik Khan () and B Ravikumar ()

Development and Comp Systems from EconWPA

Abstract: We develop a model of costly technology adoption where the cost is irrecoverable and fixed. Households must decide when to switch from an existing technology to a new, more productive technology. Using a recursive approach, we show that there is a unique threshold level of wealth above which a household will adopt the new technology and below which it will not. This threshold is independent of preference parameters, and depends only on technological parameters. Prior to adoption, households invest at increasing rates but consumption growth is constant. We also show that richer households adopt sooner which is consistent with the evidence from the Green Revolution. Our results are robust to households having access to loans.

JEL-codes: O1 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-tid
Date: 1998-02-04
Note: Type of Document - PDF; prepared on Acrobat PDF; pages: 21 ; figures: included
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http://129.3.20.41/eps/dev/papers/9802/9802001.pdf (application/pdf)

Related works:
Working Paper: Costly Technology Adoption and Capital Accumulation (1997)
Working Paper: Costly technology adoption and capital accumulation (2000)
Journal Article: Costly Technology Adoption and Capital Accumulation (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpdc:9802001

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