J.A. Schumpeter is above others well known for emphazising that innovative activities and the process of technological change is to be considered as disequilibrating (creative destruction). For economies whose development is mainly pushed forward by innovative activities of entrepreneurs or firms one consequently cannot expect that the criteria of a neoclassical point economy are met. One rather has to consider economies which are characterised by technological dualism or even pluralism. In this context empirical research (also by one of the authors) has shown that those structures are by no means transitory but that they persist for a considerable time.
To explain those findings the paper suggests a theoretical model of technological evolution where innovative activities are modelled as a myopic search on the micro-level. Within a context of technological bottlenecks and depleting technological potentials own search activities but also technological interaction by imitation and cross-fertilization effects push forward technological progress.
To formalize those interactions on the micro-level we apply the master equation approach. Here the technological evolution is modelled as a sequence of (relative) technological levels where stepping from one level to the next higher one is governed by stochastic transition rates. A micro-technological motivation for the specific nature of those transition rates is given, taking into account depleting technological potentials, imitation and cross-fertilization effects as well as the firms own search endeavours. In addition the effects of technological obsolescence and scientific progress are considered.
On this basis it can be shown how interaction on the micro-level leads to characteristic macrostructures. Depending on the nature of the transition rates, the master-equation model can either be solved analytically or the solution is approximated by simulation runs. As to the results, we provide solutions for different scenarios. Neglecting imitation and cross-ferilization effects in a first scenario, by the stochastic nature of the model a heterogeneous intra-sectoral structure with a single peaked macro-structure emerges. This result does also meet the criteria of a neoclassical point economy. With imitation effects working in scenario 2 this micro-macro-structure does not change, although on the average the relative technological level achieved raises. Considering strong cross-fertilization effects in scenario 3 bimodal macro-structures emerge which do not vanish in time. Consequently, a persistent gap between technology leaders and lagging firms is to be observed.
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University of Augsburg, Department of Economics, Universitätsstr. 16, D-86135 Augsburg
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