Sequential Production, Modular Techniques and Technological Change

Most economic production models are restricted to relationships between input and output quantities. In the presence of technological change, these models do not capture all relevant information on production processes. As the present paper aims at demonstrating, even a stylized representation of the internal structure of production processes helps to better understand the dynamics of technological change. To this purpose, production processes are interpreted as sequences of operations (techniques) during which the object of production is successively modified. Specifically, the paper investigates how interdependencies between the stages of a technique affect technological change by giving rise to incompatibilities or complementarities. In addition, it is discussed whether the existing literature on modular product designs and decomposable complex systems is helpful to understand the dynamics of production processes. It is argued that decomposable techniques need not be modular and that decomposability itself evolves over time, as it depends on the state of knowledge.