Chapter 17. The Diffusion of New Technology

Technological diffusion is defined widely as the process by which the market for a new technology changes over time and from which production and usage patterns of new products and production processes result. This chapter looks at both the demand and supply sides of this process at differing levels of aggregation, from the worldwide to the interfirm or household level, via consideration of intensive and extensive margins. Realized diffusion patterns are discussed and theoretical underpinnings of the diffusion process explored. Econometric models, data availability, and estimation are also considered although there is little attempt to be comprehensive re the latter given existing surveys. Diffusion policy is also addressed and some comments on future research directions offered.