PRICE-CONDITIONAL TECHNOLOGY

Economics theorists for years have considered the possibility that the direction of technical change is altered by changes in relative prices. Prices also have been identified as one of the determinants of technical change through innovation. This article extends the theory of the firm to cover situations in which the firm’s' technology set is conditional on expected prices. The basic idea is to distinguish between “"market prices,"” or the prices that guide the firm’s choices subject to the technology that is in place, and “"normal prices,"” the prices conditioning the choice of technology. A “"generalized”" price effect is obtained that included the traditional price effect as well as the technical change effect of price changes, and an example is presented.


Issue Date:
1994-07
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/31222
Published in:
Journal of Agricultural and Resource Economics, Volume 19, Number 1
Page range:
161-172
Total Pages:
12




 Record created 2017-04-01, last modified 2017-08-24

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