The Political Reception of Innovations

Abstract

Why do some societies embrace innovative technologies, policies, and ideas, while others are slow to adopt, or even resist, them? We focus on features of an innovation that are expected to affect the incumbent elite's economic activities, and hence the elite's reaction. The elite can choose whether to appropriate the innovation for itself; encourage its adoption; tax, regulate, or limit or block it. Six features of the innovation affect the elite response: i) whether it is easy to replicate; ii) whether it complements or competes with the elite's sources of income; iii) whether its impact is broad or narrow; iv) whether it is loca- tion-dependent, and v) concealable; vi) whether it requires large xed costs. Some of these factors have been considered in other work; here we assess them together. We provide illustrative evidence of the relevance and generality of the model to understand the fate of a variety of innovations.

Keywords: innovation, regulation, rent-seeking

JEL Classification: D72, L50, O30