The Measurement of Technology

This paper briefly discusses some of the present methods used for the measurement of technology. Shortcomings of the methods discussed are noted with respect to both cross section and time series data. The paper then defines technology and presents a new method for the measurement of technology with the use of set theory. Formulas are presented for calculating indexes of technology and aggregating these indexes over firms in an industry. A hypothetical example is presented to illustrate the method of measurement. Several possible uses of the proposed measurement of technology are suggested in the paper. These include policy models, demand equations, and linear programming.