Journal Article

Compensating for Information Externalities in Technology Diffusion Models

Allan Shampine

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 80, issue 2, pages 337-346
Published in print May 1998 | ISSN: 0002-9092
Published online May 1998 | e-ISSN: 1467-8276 | DOI: http://dx.doi.org/10.2307/1244506
Compensating for Information Externalities in Technology Diffusion Models

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  • Technological Change; Research and Development
  • Agricultural Economics

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The role of information in the adoption of new technologies is discussed, focusing on the role of information externalities when nonadopters observe adopters in order to gather information. A Bayesian model of aggregate adoption is derived and the social planner's relationship to the model is discussed. The fact that the information externality is uncompensated suggests that too little adoption may occur. The social planner's problem is solved numerically, demonstrating rapid learning on the part of adopters and a limited ability for the social planner to compensate for the information externality.

Keywords: adoption; Bayesian; diffusion; externality; information; O310; Q160

Journal Article.  0 words. 

Subjects: Technological Change; Research and Development ; Agricultural Economics

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