An Atemporal Microeconomic Theory and an Empirical Test of Price-Induced Technical Progress
UC Davis Agricultural and Resource Economics Working Paper No. 04-009
32 Pages Posted: 1 Nov 2004
Date Written: October 2004
Abstract
An exhaustive comparative statics analysis of a general price taking cost-minimizing model of the firm operating under the influence of price-induced technical progress is carried out from a dual vista. The resulting refutable implications are observable and thus amenable to empirical verification, and take on the form of a symmetric and negative semidefinite matrix. Using data from individual cotton gins in California's San Joaquin Valley, we empirically test the complete set of implications of the price-induced technical progress theory using both classical and Bayesian statistical procedures. We find that the data are fully consistent with the atemporal, costminimizing, price-induced microeconomic theory of technical progress.
Keywords: Price-induced technical progress, comparative statics
JEL Classification: C60, D21
Suggested Citation: Suggested Citation
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