Evaluating Policy Effectiveness for Technology Adoption
A government wants to speed up the transition to a new, more efficient technology. They are considering two policy options:
- A large, one-time subsidy offered only to the first 5% of consumers who adopt the technology.
- A smaller, ongoing subsidy available to all consumers, designed to make the new technology's total cost of ownership equal to that of traditional technologies.
Based on the principles of how new technologies achieve mass-market acceptance, which policy is more likely to trigger a period of rapid, widespread adoption? Justify your reasoning.
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