Technical Change, Pecuniary Externality and the Market Failure

Hom M. Pant
Additional contact information
Hom M. Pant: University of Tasmania

GE, Growth, Math methods from University Library of Munich, Germany

Abstract: First, a small open economy is analyzed to show that even a complete and competitive market may fail to produce Pareto-efficient outcomes under conditions of changing technology. It is mainly because price- taking agents can make the prices they face by changing their technology or technique of production. It is then shown that this result holds equally true for the regional sub-economies of this economy. A legal provision of R&D tax/subsidy based on payroll changes is shown to be a second best policy that corrects the market failure with a small dead- weight loss. This policy does not require actual tax collection or subsidy payment and may be used by regional governments to correct technological market failure at regional levels. The provision improves the functioning of the market by eliminating the mismatch between the type of production sector and the type of technological/technical change they introduce.

Keywords: Technical Change; Pecuniary Externality; Market Failure (search for similar items in EconPapers)
JEL-codes: D6 O P (search for similar items in EconPapers)
Pages: 20 pages
Date: 1996-09-27, Revised 1997-04-30
Note: Type of Document - Word 7.0; prepared on IBM PC ; to print on HP LaserJet 4; pages: 20; figures: included
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/ge/papers/9609/9609001.pdf (application/pdf)
https://econwpa.ub.uni-muenchen.de/econ-wp/ge/papers/9609/9609001.doc.gz (application/msword)
https://econwpa.ub.uni-muenchen.de/econ-wp/ge/papers/9609/9609001.ps.gz (application/postscript)
https://econwpa.ub.uni-muenchen.de/econ-wp/ge/papers/9609/9609001.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpge:9609001

Access Statistics for this paper

More papers in GE, Growth, Math methods from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).