Innovate or Imitate? Behavioural Technological Change

C.H. Hommes () and Paolo Zeppini
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C.H. Hommes: University of Amsterdam

No 13-18, CeNDEF Working Papers from Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance

Abstract: We propose a behavioural model of technological change with evolutionary switching between boundedly rational costly innovators and free imitators, and study the endogenous interplay of innovation decisions, market price dynamics and technological progress. Innovation and imitation are strategic substitutes and exhibit negative feedback. Endogenous technological change is the cumulative outcome of innovation decisions. There are three scenarios: market breakdown, Schumpeterian rents and learning curves. The latter is characterized by an increasing fraction of innovators when demand is elastic, while inelastic demand allows technological progress with shrinking innovation effort. Model simulations are compared to empirical data of two industrial sectors.

Date: 2013
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Related works:
Journal Article: Innovate or Imitate? Behavioural technological change (2014)
Working Paper: Innovate or Imitate? Behavioural technological change (2014)
Working Paper: Innovate or imitate? Behavioural Technological Change (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ams:ndfwpp:13-18

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