User:Zhichun Zhao/sandbox

Bibliography:

https://www.jstor.org/stable/40440065?seq=1#metadata_info_tab_contents

https://www-sciencedirect-com.ezaccess.libraries.psu.edu/science/article/pii/0048733387900254

http://agecon2.tamu.edu/people/faculty/williams-gary/652/International%20Economics%20Chapter%206.pdf

https://static1.squarespace.com/static/53ce7840e4b01d2bd01192ee/t/53e8fb02e4b0ec4ca1595937/1407777538424/Technology-Gap.pdf

http://www.economicsdiscussion.net/international-trade/models-international-trade/technological-gap-model-of-international-trade-economics/30835

The technology gap theory is a model developed by M.V. Posner in 1961, which describes an advantage enjoyed by the country that introduces new goods in a market. The country will enjoy a comparative advantage and the state of monopoly until other countries have achieved the ability to imitate the new good. Unlike the pasts theories which assumes the market to be fixed and given, such as the Heckscher-Ohlin theory, the technology gap model addresses the technological changes. During the process, according to ponser, there are three lags: the foreign reaction lag, domestic reaction lag and the demand lag. Generally, there are five major assumptions in the technology gap theory :


 * 1) There are two countries, A and B.
 * 2) The factor endowments are similar in two countries.
 * 3) Both the countries have similar demand conditions.
 * 4) The factor price ratios in the two countries are similar before trade.
 * 5) There are different techniques in the two countries.

Technology Gap

Technology gap measures the gap in technological development between two countries or two companies within the same industry. Since technology advances over time, the gap is constantly changing across nations. More importantly, the gap threatens the past definition of economy, which solely based on scarcity and prompts economists to study "the structure of production, exchange and accumulation as the interaction of science, politics, markets, culture and uncertainty." As a result, the theory is often rejected by neoclassical economists.