Similarities and Differences in the Adoption of General Purpose Technologies

28 Pages Posted: 20 Feb 2023 Last revised: 12 Apr 2023

See all articles by Ajay K. Agrawal

Ajay K. Agrawal

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

Joshua Gans

University of Toronto - Rotman School of Management

Avi Goldfarb

University of Toronto - Rotman School of Management

Date Written: February 2023

Abstract

Economic models provide little insight into when the next big idea and its associated productivity dividend will come along. Once a general purpose technology (GPT) is identified, the economist’s toolkit does provide an understanding when firms will adopt a new technology and for what purpose. The focus of the literature has been on commonalities across each type of GPT. This focus is natural, given that the goal of the literature has been to identify generalizable insights across technologies. Broadly, this literature emphasizes heterogeneity in co-invention costs across firms. Each GPT, however, provides a distinct benefit. Steam provided a new power source. The internet facilitated communication. The differences between GPTs are important for understanding adoption patterns. Using the examples of the internet and artificial intelligence, we discuss how both co-invention costs and distinct benefits determine the adoption of technology. For both technologies, we demonstrate that discussions of the impact of a GPT on productivity and growth need to emphasize the benefits as well as the costs. The goal of this paper is therefore to link the literature on co-invention costs with an understanding of the distinct benefits of each GPT.

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Suggested Citation

Agrawal, Ajay K. and Gans, Joshua and Goldfarb, Avi, Similarities and Differences in the Adoption of General Purpose Technologies (February 2023). NBER Working Paper No. w30976, Available at SSRN: https://ssrn.com/abstract=4364724

Ajay K. Agrawal (Contact Author)

University of Toronto - Rotman School of Management ( email )

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National Bureau of Economic Research (NBER)

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Joshua Gans

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Avi Goldfarb

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-8604 (Phone)
416-978-5433 (Fax)

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