Technological Innovations: Slumps and Booms
26 Pages Posted: 12 Apr 1998
Date Written: November 1997
This paper documents the delayed adoption of a major technological innovation: the adoption of the diesel locomotive in the U.S. railway industry. Contrary to other instances of major technological innovations, the delay in the adoption of the diesel locomotive was not associated with an initial slump in output. We provide a theoretical model which is consistent with both an increase and a decrease in output following the invention of a new technology. Within this model we identify the key factors that make a slump in output unlikely.
JEL Classification: E32
Suggested Citation: Suggested Citation