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A Microeconomic Approach to Induced Innovation

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  • Binswanger, Hans P

Abstract

Invention possibilities are reformulated using research processes which have a cost and different implications for rates and biases of technical change. In the comparative static model a firm has the choice to build a plant of existing design or to improve it by research. The firm maximizes present value over the lifetime of the plant. Research costs and present value of capital and labor costs influence research mix and rate and bias to technical change. Controversies in the literature of induced innovation are discussed in terms of the model. A rise in labor costs does not necessarily lead to a more labor saving bias.
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  • Binswanger, Hans P, 1974. "A Microeconomic Approach to Induced Innovation," Economic Journal, Royal Economic Society, vol. 84(336), pages 940-958, December.
    • Handle: RePEc:ecj:econjl:v:84:y:1974:i:336:p:940-58
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    1. William D. Nordhaus, 1973. "Some Skeptical Thoughts on the Theory of Induced Innovation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(2), pages 208-219.
    2. Robert Evenson, 1974. "The "Green Revolution" in Recent Development Experience," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(2), pages 387-394.
    3. G. Edward Schuh, 1974. "The Exchange Rate and U. S. Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(1), pages 1-13.
    4. Ruttan, Vernon W., 1973. "Technology Transfer, Institutional Transfer, And Induced Technical And Institutional Change In Agricultural Development," Staff Papers 13461, University of Minnesota, Department of Applied Economics.
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