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Quirino Paris and Michael R. Caputo
''Price-induced technical progress and comparative statics''
( 2001, Vol. 15 No.8 )
The conjecture of a price-induced technical progress was formulated by Hicks in 1932. It acquired prominence during the seventies with the work of Hayami and Ruttan who dealt with the agricultural sectors in the United States and Japan. A novel specification of this hypothesis is that output and input prices enter the production function as shift parameters of the technology frontier. In this paper, it is found that empirically verifiable hypotheses under price-induced technical progress can be expressed in the form of estimable combinations of partial derivatives of the input demand functions with the partial derivatives of the production function. In principle, these novel comparative statics relations are observable but their measurement requires the simultaneous estimation of the input demand and of the production functions. The price-induced technical progress specification presented in this paper includes a generalization of the Hotelling lemma.
Keywords: comparative statics
JEL: O3 - Technological Change; Research and Development: General
D2 - Production and Organizations: General
Manuscript Received : Dec 17 2001 Manuscript Accepted : Dec 17 2001

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