Technology Choice with Externalities

newdigital Technology Choice with Externalities

Article

Magazine

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI

Fascicle

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2023 - 1. A special issue in honor of Gerd Weinrich

Title

Technology Choice with Externalities

Authors

Volker Böhm, Luca V.A. Colombo

Publisher

Vita e Pensiero

Format

Article |

Pdf

Online from

05-2023

Doi

10.26350/000518_000110

Issn

0035-676X (print) | 1827-7918 (digital)

€ 6.00

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Description

We examine technology adoption in an economy populated by identical consumers either working as self-employed entrepreneurs, or supplying labor to an industrial sector that consists either of a monopsonistic firm or of several firms competing on wages. Firms are price takers on the goods market and labor is the only input in production besides technology. We show that two sources of non-marketed relations cause inefficient technology choices. Technology adoption exerts a positive externality on workers’ outside options, which in turn induces a negative pecuniary externality, increasing the wage levels required to meet workers’ participation and incentive compatibility constraints.

keywords

Technology Choice, Production Externalities, Monopsony, Strategic Interactions, Efficiency Wages.

Authors biography

Volker Böhm, Department of Business Administration and Economics and Center for Mathematical Economics - Bielefeld University - Bielefeld, Germany. Email: vboehm@wiwi.uni-bielefeld.de.
Luca V.A. Colombo, Department of Economics and Finance - Università Cattolica del S. Cuore - L.go A. Gemelli, 1, 20123 Milano. Email: * lucava.colombo@unicatt.it.