Technological Diffusion Patterns and their Effects on Industrial Dynamics

By focussing on cumulativeness and spillover effects of technological knowledge, theories on technological regimes are predominantly supply side oriented in explaining industrial dynamics. This paper introduces demand side considerations as an additional explanation for industrial dynamics. Given variations in consumer preferences over quality and network sizes of technologies, and different degrees of compatibility between succeeding technologies, we investigate how the resulting differences in the timing and frequency of new technology adoptions effect the industrial dynamics. The simulation results of the model indeed suggest a relationship between different patterns of new technology adoptions and the dynamics of the firm population.