DISTORTING THE DIRECTION OF TECHNOLOGICAL-CHANGE

This article explores a monopolist's incentive to distort the directio n of technological change. For strategic reasons, the monopolist might invent and employ a socially undesirable technology. In so doing, he might jeopardize not only the vigor of product-market competition but also the development of socially desirable methods of production. As a result, technological dynamism cannot be considered a social virtue u ntil its direction is compared with the social optimum.