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Agricultural Research and Productivity 



increase with time, and optimal A7 decreases with time (arrows 

 in figure 8.4). Hence, 7 and E[^y] will increase in time at a 

 decelerating rale. Whether a time at which A7 = will be op- 

 timal is reached, or whether A7 will decline exponentially 

 toward zero, depends on the particular form of the cost function 

 C2(A7,7). 



Figure 8.4: Equation 8.22 



In the second case, assume that the system starts in a situation 

 in which 



c(l)>^ ; 



that is, it does not pay to search. Then it may pay to start with 

 basic work and not to commence experimentation until 7 

 reaches the appropriate level. This is the familiar case of work in 

 places like Dupont or Bell Laboratories, where basic research can 

 go on for years before the stage of selection of final (marketable) 



