Frictionless Technology Diffusion: The Case of Tractors
American Economic Review
vol. 104,
no. 4, April 2014
(pp. 1368-91)
Abstract
Many new technologies display long adoption lags, and this is often interpreted as evidence of frictions inconsistent with the standard neoclassical model. We study the diffusion of the tractor in American agriculture between 1910 and 1960-a well-known case of slow diffusion-and show that the speed of adoption was consistent with the predictions of a simple neoclassical growth model. The reason for the slow rate of diffusion was that tractor quality kept improving over this period and, more importantly, that only when wages increased did it become relatively unprofitable to operate the alternative, labor-intensive, horse technology.Citation
Manuelli, Rodolfo E., and Ananth Seshadri. 2014. "Frictionless Technology Diffusion: The Case of Tractors." American Economic Review, 104 (4): 1368-91. DOI: 10.1257/aer.104.4.1368Additional Materials
JEL Classification
- L62 Automobiles; Other Transportation Equipment
- N51 Economic History: Agriculture, Natural Resources, Environment, and Extractive Industries: U.S.; Canada: Pre-1913
- N52 Economic History: Agriculture, Natural Resources, Environment, and Extractive Industries: U.S.; Canada: 1913-
- N71 Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S.; Canada: Pre-1913
- N72 Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S.; Canada: 1913-
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- Q11 Agriculture: Aggregate Supply and Demand Analysis; Prices