Industrial Policy, Lobbying, and the Direction of Technological Change

SOW Working Papers

21 Pages Posted: 20 May 2007

See all articles by Tugrul Temel

Tugrul Temel

ECOREC Economic Research and Consulting

Terry L. Roe

University of Minnesota - College of Agricultural, Food and Environmental Sciences - Department of Applied Economics

Date Written: 2003

Abstract

Adopting a two-sector overlapping generations model, this paper studies the influence of asymmetric technology absorption and producers' lobbying on the path of technological change. The underlying assumption of the paper is that, in its formulation of industrial policy, the government is open to the influence of producers' lobbying activities. Simulation results are threefold. First, biased institutions (i.e., lobbying rules) under the distorted government (i.e., the one open to lobbying) might, indeed, help drag the economy towards the right direction. In this process, current generations would experience welfare loss, while a technologically advantageous environment is prepared for future generations. Secondly, the undistorted government (i.e., the benevolent government) supports the path of capital-augmenting technological change, which is also the case when the distorted government introduces new lobbying rules leading to cost reductions in the investment goods producing sector. Thirdly, sectoral asymmetries in technology assimilation cannot correct the bias in the political market, and hence cannot be considered a critical factor determining the direction of technological change.

Suggested Citation

Temel, Tugrul and Roe, Terry L., Industrial Policy, Lobbying, and the Direction of Technological Change (2003). SOW Working Papers, Available at SSRN: https://ssrn.com/abstract=987418 or http://dx.doi.org/10.2139/ssrn.987418

Tugrul Temel (Contact Author)

ECOREC Economic Research and Consulting ( email )

Wilhelminastraat 164-3
Amsterdam, 1054 WS
Netherlands

Terry L. Roe

University of Minnesota - College of Agricultural, Food and Environmental Sciences - Department of Applied Economics ( email )

1994 Buford Avenue
St. Paul, MN 55108
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
38
Abstract Views
348
PlumX Metrics