Editing Induced innovation (section)

'''Induced innovation''' is a [[microeconomic]] [[hypothesis]] first proposed in [[1932 in literature|1932]] by [[John Hicks]] in his work ''[[The Theory of Wages]]''. He proposed that "a change in the relative prices of the factors of production is itself a spur to [[invention]], and to invention of a particular kind&mdash;directed to economizing the use of a factor which has become relatively expensive."

Considerable literature has been produced on this hypothesis, which is often presented in terms of the effects of wage increases as an encouragement to labor-saving innovation. The hypothesis has also been applied to viewing increases in [[energy]] costs as a motivation for a more rapid improvement in [[efficient energy use|energy efficiency]] of goods than would normally occur.