Are Innovations Really Induced by Input Price Changes?
September 16 Filley-Garey Seminar by Richard Shumway of Washington State University Technological innovations in agriculture and elsewhere, of course, follow from advances in general scientific knowledge. But the development of technologies can also be driven by input prices - escalating prices for one particular input encourage development of new technology that substitutes for that input. This "induced innovation" hypothesis has been widely examined by economists, but despite its intuitive appeal, it has received limited empirical support. Professor Shumway will present some new research findings relevant to this puzzle.
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