IMPLICATIONS OF REGULATION FOR INDUCED TECHNICAL CHANGE.

V. Kerry Smith

Research output: Chapter in Book/Report/Conference proceedingChapter

13 Scopus citations

Abstract

The purpose of this paper is to extend the Averch-Johnson model of the regulated firm so as to allow for the endogenous selection of factor augmenting technical change. A simple model is developed which avoids the questions of timing, capitalization, and internalization of innovations and focuses on the incentives to a firm for innovational choice under cost minimizing conditions versus several formulations of the regulated setting. The results suggest that regulation can distort the innovational selections. Moreover, in the case of the profit maximizing firm subject to ″fair″ return on investment regulation, the innovational choices will reinforce the static overcapitalization tendencies.

Original languageEnglish (US)
Title of host publicationBell J Econ Manage Sci
Pages623-632
Number of pages10
Volume5
Edition2
StatePublished - Sep 1974
Externally publishedYes

ASJC Scopus subject areas

  • Engineering(all)

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