Economics of localized technological change: a model of creative adoption

Cristiano Antonelli ()

Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo Alberto. WP series from University of Turin

Abstract: The traditional divide between innovation, adoption and imitation is questioned in the context of the economics of localized technological change. Firms are induced to change their technology when product and factor markets conditions do not meet their expectations and irreversible choices make adjustments expensive. Technological change is the result of the combination of research and search activities that lead to both the introduction of new technologies and to imitative adoptions. Both command resources and engender specific revenues. Localized technological change consists of creative adoption where external knowledge and embodied technologies are implemented with internal competence and idiosyncratic knowledge acquired by means of learning processes. The identification of the net profitability of adoption as defined by the gross profitability of adoption minus adoption costs contributes the economics of technological change. The analysis of the evolution of the net profitability of adoption in the context of the economics of localized technological change shows that the dynamics of creative adoption is able to generate a s-shaped diffusion path at the aggregate level.

Date: 2004-03
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