Innovate or imitate? Behavioural Technological Change

Cars Hommes and Paolo Zeppini

No 13-099/II, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper led to a publication in the 'Journal of Economic Dynamics and Control' , 2014, 48, 308–324.

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.

Keywords: discrete choice; innovation patterns; learning curves; switching behavior (search for similar items in EconPapers)
JEL-codes: C62 C73 D21 O33 (search for similar items in EconPapers)
Date: 2013-07-26
New Economics Papers: this item is included in nep-dcm, nep-ene, nep-evo and nep-ino
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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:tin:wpaper:20130099

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