Frictionless Technology Diffusion: The Case of Tractors

American Economic Review · 2014 · Volume 104 · Issue 4

Abstract

Many new technologies display long adoption lags, and this is often interpreted as evidence of frictions inconsistent with the standard neoclassical model. We study the diffusion of the tractor in American agriculture between 1910 and 1960-a well-known case of slow diffusion-and show that the speed of adoption was consistent with the predictions of a simple neoclassical growth model. The reason for the slow rate of diffusion was that tractor quality kept improving over this period and, more importantly, that only when wages increased did it become relatively unprofitable to operate the alternative, labor-intensive, horse technology.

Keywords

Automobiles, Other Transportation Equipment, Economic History: Agriculture, Natural Resources, Environment, and Extractive Industries: U.S., Canada: Pre-1913, Canada: 1913-, Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S., Technological Change: Choices and Consequences, Diffusion Processes, Agriculture: Aggregate Supply and Demand Analysis, Prices

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