alone changes perceptions. The spread of computer use in agriculture illustrates this learning-by-using. Producers began with simpler programs (spreadsheets and word processing) and then branched out into more sophisticated management systems after becoming more familiar with computers in general (Putler and Zilberman, 1988). In other cases, user experience with new technology can lead to improvements that actually make the technology more profitable to use, rather than simply changing perceptions about profitability. For example, the performance of early drip irrigation systems was often poor because drip lines clogged. User experience with clogging problems led manufacturers to redesign the drip systems, which led in turn to accelerated diffusion of these systems (for example, Shrestha and Gopalokrishnan, 1993).
Third, the cost of producing and installing equipment for the new technology frequently falls over time because of improvements in technology design and cost reductions resulting from production experience of the manufacturers (i.e., learning-by-doing). Lichtenberg (1989), for example, showed that increases in irrigated soybean and corn production in the Northern High Plains were due in part to falling costs of center-pivot irrigation systems. Kislev and Shchori-Bachrach (1973) argue that learning-by-doing played a critical role in the spread of winter vegetable production in Israel. Initially, only the most skilled producers were able to produce winter vegetables. Over time, these producers developed standard methods for vegetable cultivation under Israeli conditions, which less-skilled producers were increasingly able to use.
Finally, the profitability of a new technology relative to existing ones may rise over time as the existing capital stock ages and becomes less productive (Salter, 1960). As producers replace their existing equipment, they tend to invest in equipment embodying the new, more productive technologies.
Information-intensive technologies may have high fixed costs, either in terms of equipment purchases or in terms of acquiring the skills necessary to use them. The economic theory of investment suggests that adoption of such technologies may be discontinuous over time, because uncertainty about future conditions makes waiting a preferred option (Dixit and Pindyck, 1993). In some cases rapid diffusion has occurred after periods of extreme conditions resulted in substantial alterations in expectations about future prices. Examples include the rapid diffusion of drip irrigation in California during the droughts of 1976–1977 and 1988–1991, when water prices rose sharply and water availability declined sharply; conservation tillage during the energy crisis years of the 1970s, when energy prices rose sharply; and center-pivot irrigation in the High Plains after the grain price spikes of 1973–1974 (Lichtenberg, 1989).
It is important to recognize that producers are buying the services of the technology, not the equipment that embodies the technology. Purchasing those services does not necessarily require purchasing the equipment, although equipment purchase may be the most economical means for some. There are many other ways of packaging and selling those services, such as equipment rental,