Time-to-build obsolescence and the technological paradox

Abstract

The paper focusses on the technological paradox. To analyze the possible temporary negative eect of an innovation, we make use of a ow representation of production. Our aim is to show that such phenomenon can be justied by a simple property of the production process: in real time costs strictly come before proceeds.Moving in the same direction of Amendola (1974), we analyze the obsolescence effect induced by a rise in the interest rate. Furthermore, we analyze the role of capital market stickiness on the timing of the technological paradox and on the distribution of the obsolescence eect among the different stages of a vertical integrated production system.Technological paradox, technology adoption, time-to-build, obsolescence.