Technology Choice and Saving in the Presence of a Fixed Adoption Cost

9 Pages Posted: 29 Jan 2016

See all articles by Charles Ka Yui Leung

Charles Ka Yui Leung

The Chinese University of Hong Kong (CUHK) - Department of Economics

Chung-Yi Tse

The University of Hong Kong - School of Economics and Finance

Date Written: February 2001

Abstract

This paper explores the relationship between technology choice and saving in the presence of fixed costs of technology adoption. While richer agents adopt the more productive technology immediately it is available, poorer agents optimally choose to wait before switching to the better technology. In the interim, they save more than others and more than in the absence of the prospect of switching to the new technology. The paper thus provides an explanation for the phenomenon that the saving rate and the growth rate of output increase over time in the transition.

Suggested Citation

Leung, Ka Yui Charles and Tse, Chung, Technology Choice and Saving in the Presence of a Fixed Adoption Cost (February 2001). Review of Development Economics, Vol. 5, Issue 1, pp. 40-48, 2001. Available at SSRN: https://ssrn.com/abstract=2724260 or http://dx.doi.org/10.1111/1467-9361.00105

Ka Yui Charles Leung (Contact Author)

The Chinese University of Hong Kong (CUHK) - Department of Economics ( email )

Shatin, N.T.
Hong Kong
+852-2609-7158 (Phone)
+852-2603-5805 (Fax)

HOME PAGE: http://www.cuhk.edu.hk/eco/staff/kyleung

Chung Tse

The University of Hong Kong - School of Economics and Finance ( email )

8th Floor Kennedy Town Centre
23 Belcher's Street
Kennedy Town
Hong Kong
+852 2859 1035 (Phone)
+852 2548 1152 (Fax)

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