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  • Economic Model of Technology Choice

Innovation Rents

Innovation rents are the additional profits a firm earns by adopting a new technology before its competitors. These rents arise when a change in the relative prices of inputs (e.g., labor becoming more expensive than energy) makes a new technology the most cost-effective option. The first firms to switch from the old, now more expensive technology, to the new, cheaper one can produce at a lower cost than their rivals, thus earning these rents.

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Economics

Economy

Introduction to Microeconomics Course

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