Vested Interests and Resistance to Technology Adoption

E.J.F. Canton, H.L.F. de Groot, R. Nahuis

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Abstract

Employed technologies differ vastly across countries. Within countries many technologies that would obviously improve firms’ efficiency are not adopted. This paper explains these observations by emphasizing that a new technology positively affects workers by lowering prices and increasing their real income, but also negatively by costs of getting acquainted with the new technology. If the costs of adoption for workers exceed the benefits, they will aim at keeping the old technology in place. We formalise the trade-off in a simple OLG model with majority voting. Age groups that lose from adopting resist. Successful resistance blocks adoption and hence lowers growth. Finally, we analyse the effects of tougher competition. Provided that consumption and leisure are relatively good substitutes, tougher competition mitigates resistance and thus favours economic growth as it increases the share of the rent associated with the new technology that is being captured by the workers.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages39
Volume1999-106
Publication statusPublished - 1999

Publication series

NameCentER Discussion Paper
Volume1999-106

Keywords

  • technological change
  • resistance
  • vested interests
  • overlapping generations
  • competition

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    Canton, E. J. F., de Groot, H. L. F., & Nahuis, R. (1999). Vested Interests and Resistance to Technology Adoption. (CentER Discussion Paper; Vol. 1999-106). Macroeconomics.