Lobbies and technology diffusion

de Diego Comin

"Do lobbies affect technology diffusion and growth? A number of authors have identified the importance of vested interests as a deterrent to technology diffusion and the relevance that this may have for growth. however, the evidence that exists about this mechanism is just anecdotal. In this paper we build a model of lobbying and technology diffusion where the speed of diffusion of new technologies depends on some dimensions of the political regime and on the whether there is an old technology that may be substituted by the new technology. This differential effect of institutions on the diffusion of technologies with a predecessor constitutes the central element of our identification strategy. To implement this test we use technology diffusion data from Comin and Hobijn [2004]. We find that the relevant institutional variables have a differential effect on the diffusion of technologies with a predecessor technology as predicted by the theory. We show that this result is unlikely to be driven by omitted variables, or reverse causality"--National Bureau of Economic Research web site.