Public Policy and the Diffusion of Technology

The sharp rise in the cost of energy over the last few years has greatly increased the interest of industrial countries in accelerating the development of new energy technology. Since the early 1970's, for example, the U.S. government has more than tripled the amount it spends annually on energy research and development. This study investigates the adoption of new technology in the electric utility industry. It identifies and assesses the relative importance of the major factors influencing the rate at which large-scale generating units have been introduced. It also considers how public policy might influence these factors.

The electric power industry was chosen for several reasons. First, it is important and is growing more important with time. Since World War II, rapid growth in the demand for electric power has allowed the industry to double its output every ten years. Second, governments have always played a major role in the supply of electricity both by regulation of privately owned firms and by ownership of power systems. Third, the interregional and international differences that exist in this industry provide an opportunity to study the diffusion of new technology under different industrial structures, types of ownership, demand patterns, and supply conditions.

No attempt is made here to explain the creation of new generating technology; the focus is entirely on diffusion. Diffusion is investigated in three countries—the United States, Canada, and Great Britain—focusing on the last quarter century.