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Analysis of transition dynamics caused by technological breakthroughs: Cause of productivity slowdown and drop in existing firms’ stock prices.
- Source :
-
Structural Change & Economic Dynamics . Dec2015, Vol. 35, p12-25. 14p. - Publication Year :
- 2015
-
Abstract
- This paper examines the transition dynamics caused by technological breakthroughs. Our results show that technological breakthroughs cause a productivity slowdown and a drop in the stock prices of existing firms; these findings are consistent with observations in the 1970s. We explain how technological breakthroughs cause these phenomena. The emergence of a new technology creates new business opportunities, which reduces existing firms’ profits, thus causing their stock prices to drop. This decline in existing firms’ profits discourages R&D-intensive firms from entering the sector; this decreases aggregate R&D activity, and thus the growth rate of productivity declines. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 0954349X
- Volume :
- 35
- Database :
- Academic Search Index
- Journal :
- Structural Change & Economic Dynamics
- Publication Type :
- Academic Journal
- Accession number :
- 110680677
- Full Text :
- https://doi.org/10.1016/j.strueco.2015.09.001