This paper studies the pattern of technical change at the firm level by applying and extending the Quantal Response Statistical Equilibrium model (QRSE). The model assumes that a large number of cost minimizing firms decide whether to adopt a new technology based on the potential rate of cost reduction. The firm in the model is assumed to have a limited capacity to process market signals so there is a positive degree of uncertainty in adopting a new technology. The adoption decision by the firm, in turn, makes an impact on the whole market through changes in the factor-price ratio. The equilibrium distribution of the model is a unimodal probability distribution with four parameters, which is qualitatively different from the Walrasian notion of equilibrium in so far as the state of equilibrium is not a single state but a probability distribution of multiple states. This paper applies Bayesian inference to estimate the unknown parameters of the model using the firm-level data of seven advanced OECD countries over eight years and shows that the mentioned equilibrium distribution from the model can satisfactorily recover the observed pattern of technical change.
Other Recent Journal Article / Working Papers
Illegal Wildlife Trade: Scale, Processes, and Governance
Investigating the Influence of Non-state Actors on Amendments to the CITES Appendices
Emerging illegal wildlife trade issues: A global horizon scan
Motivations for (non-)compliance with conservation rules by small-scale resource users
Horizon Scan of the Belt and Road Initiative
Building sustainability into the Belt and Road Initiative’s Traditional Chinese Medicine trade