SYNTHETIC FIBRES IN THE WOOL TEXTILE INDUSTRY: A STUDY OF THE ROLE OF PRICE IN TECHNOLOGICAL ADJUSTMENT
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Conventional growth curves, such as the logistic and Gompertz, though both useful and successful as descriptive measures, lack economic substance. Where a new product is developed expressly to compete with an existing close substitute, any economist might reasonably expect the relative prices of the two goods to be relevant to the rate at which the innovation is adopted. Yet growth curves of the class mentioned above are functions of time only.
In this paper we attempt to allow for the influence of price. The logistic law of growth remains basic to the pattern of adoption in our model. However, it is assumed that relative prices can both accelerate the rate of adoption, and affect the long-run share of the market enjoyed by the new product. (We shall use the term price-accelerated trend to designate this type of model.) Such a model is fitted to U.S. quarterly mill consumption of synthetic staples and virgin raw wool for the period 1954-1962, with some surprising results.