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Unformatted text preview: Section Notes: Week 6 Outline Technology Adoption Model Induced Innovation Di usion These section notes follow Course Readings Chapter 8. Announcement: When considering the case of heterogenous demand for an excludable public good (club good), for the purposes of this class you can always assume that a monopoly will only serve high demand (or rich ) individuals. This is assumption doesn't always hold in reality, and you can see how you would solve for those cases in Practice Problems 5 on bspace, in the section notes. Conservation Technologies Conservation technologies increase input use e ciency and saves resources and/or reduces pollution. They are not limited to agriculture (.e.g. electricity generating coal technology, paint spraying, cooking stoves, insulation). Inputs are not always e ective, as waste or a negative externality is often generated. Firms will choose the type of technology that maximizes their pro ts, which are a ected by costs of the technology and the input, potential taxes on pollution, and individual rm characteristics. Technology Adoption Model First we de ne out notation: Item Notation Note Output Y = f ( e ) Price of Output p Input Use E ciency h i ( α ) < h i ( α ) ≤ 1 Firm E ciency/Environmental Quality α Variations such as soil type, managerial e ciency Actual Input x E ective Input e = xh i ( α ) i denotes type of technology Price of Actual Input w Price of Pollution v Price of pollution might be a tax, can be zero too Residue Z = [1- h i ( α )] x Level of pollution Technology Cost K i Can also be a function of area t : K i ( t ) The idea here is that di erent technologies will have di erent levels of e ectiveness across environments or based on how they are used. For our purposes, h i ( α ) will usually be provided for you....
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- Spring '09
- Public Good, Technology Adoption