Abstract

This report introduces technology adoption indicators (TAIs) that can be used to assess whether particular industries are likely to adopt new technologies. The TAIs are several measures of industry concentration, number of patents, number of research joint ventures, public policy, and history of technology adoption. Each TAI is supported by economic theory and confirmed by empirical studies. The TAIs are then applied to an analysis of whether a particular ATP-funded flow-control machining (FCM) technology might be adopted by two industries: lawnmower engine manufacturers and the airplane engine manufacturers. According to broadly defined TAI measures, based on Standard Industrial Classification (SIC) and the North American Industry Classification System (NAICS), lawnmower manufacturers are more likely than airplane engine manufacturers to adopt new technology. Using precise, narrowly defined data specific to the lawnmower engine industry, we confirmed that new technology adoption by lawnmower manufacturers is likely. In this case study, the regulatory environment-specifically, the environment created by Environmental Protection Agency (EPA) regulation-was the most important factor influencing the likelihood of the lawnmower engine industry adopting the FCM technology.

New EPA regulations require emissions-improving changes to most lawnmower engines currently available in the marketplace, and the FCM technology is a cost-competitive alternative to conventional emissions-improving technologies. We compare the cost of the FCM technology with the cost of more conventional technology for reducing engine emissions in four lawnmower engine market segments: small side-valve (SV) engines, small overhead-valve (OHV) engines, large side-valve engines, and large overhead-valve engines. For large SV engines, the cost advantage of the FCM technology is significant. For small SV engines, the FCM technology has a modest cost advantage.

We then use a dynamic macroeconomic model to compare the national economic impacts of the FCM technology cost and the conventional technology cost for each market segment. Either would reduce gross domestic product (GDP); however, for large SV engines, the FCM technology has less of a negative impact on GDP, personal income, and employment, compared with conventional technologies. The advantage of the FCM technology in this market is substantial. For example, using the FCM technology instead of conventional emission-lowering technology on large SV engines would result in savings of $982 million in GDP over the analysis period. For small SV engines, the use of the FCM technology in place of conventional technology would result in savings of $261 million in GDP over the analysis period.

Key words:  Advanced Technology Program (ATP); benefit cost; program evaluation; technology adoption.

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Date created: June 11, 2003
Last updated: August 3, 2005

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