Price-induced technical progress and comparative statics

Quirino Paris () and Michael Caputo
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Quirino Paris: University of California, Davis

Economics Bulletin, 2001, vol. 15, issue 8, 1-8

Abstract: The conjecture of a price-induced technical progress was formulated by Hicks in 1932. It acquired prominence during the seventies with the work of Hayami and Ruttan who dealt with the agricultural sectors in the United States and Japan. A novel specification of this hypothesis is that output and input prices enter the production function as shift parameters of the technology frontier. In this paper, it is found that empirically verifiable hypotheses under price-induced technical progress can be expressed in the form of estimable combinations of partial derivatives of the input demand functions with the partial derivatives of the production function. In principle, these novel comparative statics relations are observable but their measurement requires the simultaneous estimation of the input demand and of the production functions. The price-induced technical progress specification presented in this paper includes a generalization of the Hotelling lemma.

Keywords: comparative; statics (search for similar items in EconPapers)
JEL-codes: D2 O3 (search for similar items in EconPapers)
Date: 2001-12-17
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Citations: View citations in EconPapers (9)

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