Technology Diffusion and Public Policy

It is argued that on the basis of market failure a good case can be made for public policy aimed at tuning the speed of diffusion. Market failure may arise from imperfect information, as a consequence of market structure or because there are externalities to adoption. It is important to take account...

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Bibliographic Details
Published in:The Economic journal (London) 1994-07, Vol.104 (425), p.918-930
Main Authors: Stoneman, Paul, Diederen, Paul
Format: Article
Language:English
Subjects:
Business innovation
Diffusion index
Economic policy
Economic theory
Emerging technology
Environmental policy
Information technology
Innovation diffusion
Public policy
Subsidies
Technological change
Technological innovation
Technology
Technology policy
Technology transfer
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Summary:It is argued that on the basis of market failure a good case can be made for public policy aimed at tuning the speed of diffusion. Market failure may arise from imperfect information, as a consequence of market structure or because there are externalities to adoption. It is important to take account of the fact that the adoption of any specific technology is only one element in a firm's strategy to increase its competitiveness. The decision to adopt one innovation is therefore linked to other technology adoptions, to R&D efforts, to learning and skill management and to other strategic choices. A range of possible diffusion policies are discussed, but it is noted that although there are good reasons for having such policies, there are few explicit diffusion policies in existence, and those that do exist have rarely been properly evaluated.
ISSN:0013-0133
1468-0297
DOI:10.2307/2234987