Technology adoption and inequality

Abstract

The prices of technological equipment have seen significant declines in recent decades. In Chapter 2 of this thesis, we examine the evidence and causes of these price declines. Among several factors, we focus on the learning curve effect where the cost of producing technological equipment declines as the cumulative number of produced units increases. In Chapter 3 we review the literature on technology adoption and the timing decisions of such adoptions. We aim to contribute to the literature by examining the timing of technology adoption under price declines. Furthermore, we consider the effect of human capital on such adoption decisions.

We begin in Chapter 4 by developing a model of the timing of technology adoption under an exogenous price decline. Section 1 considers a single price drop in followed by multiple price drops in section 2. From the analytical results developed in these sections, we examine the effect of human capital on the adoption decision.

Chapter 5 considers the price of the technological equipment to be endogenous to the model. We run computational experiments to demonstrate the declining price as a function of time. We examine the effect of the distribution of human capital on the price decline and adoption decision of the individuals of the population. We conclude with insights on the relationship between human capital inequality and technology adoption decisions.