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A Quantal Response Statistical Equilibrium Model of Induced Technical Change in an Interactive Factor Market: Firm-Level Evidence in the EU Economies.
- Source :
- Entropy; Mar2018, Vol. 20 Issue 3, p156, 19p
- Publication Year :
- 2018
-
Abstract
- This paper studies the pattern of technical change at the firm level by applying and extending the Quantal Response Statistical Equilibrium model (QRSE). The model assumes that a large number of cost minimizing firms decide whether to adopt a new technology based on the potential rate of cost reduction. The firm in the model is assumed to have a limited capacity to process market signals so there is a positive degree of uncertainty in adopting a new technology. The adoption decision by the firm, in turn, makes an impact on the whole market through changes in the factor-price ratio. The equilibrium distribution of the model is a unimodal probability distribution with four parameters, which is qualitatively different from the Walrasian notion of equilibrium in so far as the state of equilibrium is not a single state but a probability distribution of multiple states. This paper applies Bayesian inference to estimate the unknown parameters of the model using the firm-level data of seven advanced OECD countries over eight years and shows that the mentioned equilibrium distribution from the model can satisfactorily recover the observed pattern of technical change. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 10994300
- Volume :
- 20
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- Entropy
- Publication Type :
- Academic Journal
- Accession number :
- 128703698
- Full Text :
- https://doi.org/10.3390/e20030156