The Impact of Technological Change on a Competitive Industry

This study analytically evaluates the impact of technological change on output and input markets in a competitive industry of identical firms. Firm-level technology and technological change are represented parametrically as local approximations to unknown functional forms. The comparative statics analysis solves for changes in equilibrium market prices and quantities as functions of parameters that characterize technological change. The technology-induced shift in industry supply is shown to equal the rate of technological change plus the share-weighted induced change in input prices. The model provides a consistent and systematic framework for evaluating the impact of technological change, either ex ante or ex post