ABSTRACT
This paper presents the theoretical foundations of the induced innovation model. We try to show its inadequacy to explain the rise of a new technological paradigm. The validity of the model is restricted by its central hypothesis as to the economic rationality of productive agents that are induced to introduce innovations to save the more expensive production factor. Supply-side constraints on innovations are neglected, but they are very important to explain the technical and scientific characteristics that define a new technological pattern; so, the factor-saving bias is the only thing the model can say about a new technological paradigm to be generated.
KEYWORDS:
Innovation; technological change; agriculture; Hayami-Ruttan model