ENERGY RELATED INNOVATION: THE MISSING LINK. A REVISION AND INTEGRATION OF THE BUSINESS CYCLE THEORIES OF KEYNES AND SCHUMPETER

A theory is developed asserting that energy-induced first-cost-increasing waves of partially successful vehicle innovations cause depressions, while immediately successful cost-reducing innovation cause recessions. In a recession, cost-reducing innovations briefly drive down sales of vehicles using old technology. The reductions in cost, however, create opportunities for profit, while the success of the innovation allows other producers to copy it. Since consumer acceptance is high, sales increase and a boom follows. Depression innovations are characterized by a long sequence of partially successful first-cost increasing and operations cost decreasing vehicle innovations. Vehicle costs increase initially because of the investment needs for innovation. Uncertainty causes consumers to delay vehicle purchases. Declining sales cause increasing investment costs to be spread over fewer consumers, thus driving costs up further. The theory is contrasted with those of Keynes, Schumpeter, Kondratiev, and, of more recent vintage, Mensch and Freeman. The theory is tested quantitatively for the US during the 1783 to 1900 period, a period during which four long depressions occurred. Test results are highly consistent with the theory proposed. (ERA citation 09:009976)

• Corporate Authors:

  Argonne National Laboratory

  9700 South Cass Avenue
  Argonne, IL  United States  60439
• Authors:
  • Santini, D J
• Publication Date: 1983

Media Info

• Pagination: 127 p.

Subject/Index Terms

• TRT Terms: Capital costs; Demand; Economic impacts; Energy consumption; Operating costs; Reduction (Chemistry); Technological innovations; Theory
• Uncontrolled Terms: Increase
• Old TRIS Terms: Cycles; Reduction
• Subject Areas: Economics; Energy; Highways; Society; I10: Economics and Administration;

Filing Info

• Accession Number: 00386717
• Record Type: Publication
• Report/Paper Numbers: CONF-8310239-1
• Files: TRIS
• Created Date: Jul 30 1984 12:00AM