We also came to the realization that oil and gas prices might be important explanatory variables for efficiency. Thus, prices are likely to be important explanatory variables that are negatively related to the average and minimum efficiency of observed fields. We collected oil and gas prices over the time horizon, and integrated prices into our database. Theoretical Model of Technical Change . We also have made progress in the theoretical model of technical change, focusing on complementary technologies, as discussed in previous progress reports.
Production occurs at two levels.
First, there are intermediate outputs, which are products of firms that make technical discoveries and hold the associated patent for that level of technology. Second, these intermediate outputs serve as inputs in the production of the final output, which is consumed. Determine optimal pricing strategy for intermediate outputs by monopoly patent holder of technology for those intermediate outputs. Determine expected profit function for patents holders. Both models demonstrate externalities in productivity, where advances in productivity for one input increase the productivity of other inputs.