Reconciling Models of Diffusion and Innovation: A Theory of the Productivity Distribution and Technology Frontier

Jess Benhabib, Jesse Perla, Christopher Tonetti · 2021 · Econometrica

Summary. This paper develops a theory explaining how firms' choices to innovate, adopt new technology, or continue with existing methods shape the overall productivity distribution and drive economic growth. Innovation stretches the productivity gap between best and worst firms, while technology adoption compresses it. The balance between these forces determines growth rates. Adoption conditions influence innovation incentives through technology licensing and the value of waiting to adopt, ultimately affecting long-run growth.

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Benhabib, J., Perla, J., & Tonetti, C.. (2021). Reconciling Models of Diffusion and Innovation: A Theory of the Productivity Distribution and Technology Frontier. Econometrica. https://doi.org/10.3982/ecta15020

@article{benhabib-2021-reconciling-models-diffusion-innovation-theory,
  title   = {Reconciling Models of Diffusion and Innovation: A Theory of the Productivity Distribution and Technology Frontier},
  author  = {Jess Benhabib and Jesse Perla and Christopher Tonetti},
  journal = {Econometrica},
  year    = {2021},
  doi     = {10.3982/ecta15020},
  url     = {https://doi.org/10.3982/ecta15020}
}

TY  - JOUR
TI  - Reconciling Models of Diffusion and Innovation: A Theory of the Productivity Distribution and Technology Frontier
AU  - Jess Benhabib
AU  - Jesse Perla
AU  - Christopher Tonetti
JO  - Econometrica
PY  - 2021
DO  - 10.3982/ecta15020
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ER  -

Details

DOI: 10.3982/ecta15020
Countries: United States, Canada
Regions: North America
Categories: innovation-theory, general-innovation
Added: 2026-04-28