Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87291
Authors: 
Hommes, Cars
Zeppini, Paolo
Year of Publication: 
2013
Series/Report no.: 
Tinbergen Institute Discussion Paper 13-099/II
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.
Subjects: 
discrete choice
innovation patterns
learning curves
switching behavior
JEL: 
C62
C73
D21
O33
Document Type: 
Working Paper

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