Innovation Waves, Self-organised Criticality and Technological Convergence

Rainer Andergassen, Franco Nardini and Massimo Ricottilli

Modeling, Computing, and Mastering Complexity 2003 from Society for Computational Economics

Abstract: The purpose of this paper is to investigate the evolutionary process of imitation and innovation as a process of searching in a given neighbourhood of firms. Networks are the main source of information for firms willing to actively search and upgrade and which define the reachable neighbourhood whose width is strictly related to cognitive distance. We have identified two major forms of information setting off innovative behaviour: the first comes in the shape of random events which are exogenous, at least in terms of the firms' own search activity, while the second is determined by searching for technological opportunities in other economic sectors. It is this activity that generates the spreading of a new technological paradigm and that makes for technological convergence. All firms are a heterogeneous set of agents bounded by their competence, technological specificity and, more generally, rationality. The spreading of information through cognitive neighbourhoods allows firms to gradually acquire full knowledge leading to innovation waves. Imitation follows innovation as firms attempt to glean information on best practise techniques to join their sector technological leaders. Whilst innovators are temporarily allowed to reap quasi rents the imitative band wagon effect drives the profit rate down to its normal level. Productivity growth lowers the prices of sectors involved in the process of technological advance causing obsolescence and, thus, creative destruction in a Schumpeterian sense.

Keywords: Technological change; Self-organized criticality; Innovation and diffusion; Innovation waves; Creative distruction. (search for similar items in EconPapers)
JEL-codes: D50 L10 O30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-cmp, nep-dev and nep-ino
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Citations: View citations in EconPapers (2)

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Journal Article: Innovation waves, self-organized criticality and technological convergence (2006)
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