Congratulations to Professor Shanon Hsuan-Ming Hsu of our department!

Gaining Steam: Technology Diffusion with Recurring Lock-in (with Richard Hornbeck, Anders Humlum, and Martin Rotemberg, July 2026.)

Accepted, Journal of Political Economy.

Abstract: We examine barriers to technology adoption, drawing on the diffusion of steam power in US mills. Improvements in steam power generated greater relative growth in counties with less waterpower potential. Steam adoption was largely driven by entrants, with limited incumbent switching. Switching barriers continued to slow technology diffusion, despite entry and exit, because many smaller entrants opened with waterpower and then themselves became locked-in incumbents. We estimate a dynamic model of entry and technology adoption to quantify the delay in aggregate technology diffusion from this “recurring lock-in,” and corresponding losses in aggregate efficiency due to positive externalities in technology adoption.