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Learning-by-doing and the choice of technology: the role of patience

Learning-by-doing and the choice of technology: the role of patience
Learning-by-doing and the choice of technology: the role of patience
Jovanovic and Nyarko (1996) showed that when agents learn-by-doing and are myopic, less advanced agents may adopt new technologies while more advanced firms stick with the old technology since the new technology takes time to learn. In this case, the less advanced agents might eventually overtake (or "leapfrog") the advanced agents. We show that this kind of overtaking can also occur if agents are forward looking and have high discount rates. However, if agents are sufficiently patient, overtaking cannot occur. A lower discount rate increases the set of states at which agents adopt new technologies, so more patient agents tend to upgrade their technology more frequently.
9810
University of Southampton
Karp, L.
832e565b-4cb5-486e-847d-9dec6c80d39c
Lee, I.H.
dc1302c9-2a3e-4639-a587-c8d8ffbca42e
Karp, L.
832e565b-4cb5-486e-847d-9dec6c80d39c
Lee, I.H.
dc1302c9-2a3e-4639-a587-c8d8ffbca42e

Karp, L. and Lee, I.H. (1998) Learning-by-doing and the choice of technology: the role of patience (Discussion Papers in Economics and Econometrics, 9810) Southampton, UK. University of Southampton

Record type: Monograph (Discussion Paper)

Abstract

Jovanovic and Nyarko (1996) showed that when agents learn-by-doing and are myopic, less advanced agents may adopt new technologies while more advanced firms stick with the old technology since the new technology takes time to learn. In this case, the less advanced agents might eventually overtake (or "leapfrog") the advanced agents. We show that this kind of overtaking can also occur if agents are forward looking and have high discount rates. However, if agents are sufficiently patient, overtaking cannot occur. A lower discount rate increases the set of states at which agents adopt new technologies, so more patient agents tend to upgrade their technology more frequently.

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Published date: January 1998

Identifiers

Local EPrints ID: 33163
URI: https://eprints.soton.ac.uk/id/eprint/33163
PURE UUID: 39688fe4-b5eb-4ebf-91c0-fb1973549ebe

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Date deposited: 05 Feb 2008
Last modified: 17 Jul 2017 15:53

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Contributors

Author: L. Karp
Author: I.H. Lee

University divisions

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