Learning-by-Doing and the Choice of Technology: The Role of Patience

Jovanovic and Nyarko (1996) showed that when agents learn-by-doing and are myopic, less advanced agents may adopt new technologies while more advanced ̄rms stick with the old technology since the new technology takes time to learn. In this case, the less advanced agents might eventually overtake (or \leapfrog") the advanced agents. We show that this kind of overtaking can also occur if agents are forward looking and have high discount rates. However, if agents are su±ciently patient, overtaking cannot occur. A lower discount rate increases the set of states at which agents adopt new technologies, so more patient agents tend to upgrade their technology more frequently. keywords: learning-by-doing, overtaking, leapfrogging, technology adoption, economic growth JEL Classi ̄cation numbers D92, O14,O33