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Resistance to New Technology and Trade Between Areas

Quarterly Review 1911 | Winter 1995

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Resistance to New Technology and Trade Between Areas

Abstract

Historically, competition, or the extension of markets, has repeatedly brought tremendous increases in wealth. However, there is still plenty of uncertainty among economists as to why that is so. This article develops a model in which competition, modeled as the movement of goods between two areas, reduces resistance to new technology and, hence, leads to increased technology adoption and wealth. Here, the extension of markets leads to wealth increases because it reduces activities that block the use of new, more productive technology.