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Innovation Waves, Self-organised Criticality and Technological Convergence

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  • Rainer Andergassen

    ()
    (Faculty of Economics (Rimini), University of Bologna)

  • Franco Nardini

    ()
    (Department of Mathematics for the Social Sciences, University of Bologna)

  • Massimo Ricottilli

    ()
    (Department of Economics, University of Bologna)

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.

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Bibliographic Info

Paper provided by Society for Computational Economics in its series Modeling, Computing, and Mastering Complexity 2003 with number 19.

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Handle: RePEc:sce:cplx03:19

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Keywords: Technological change; Self-organized criticality; Innovation and diffusion; Innovation waves; Creative distruction.;

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Cited by:
  1. Andergassen, Rainer & Nardini, Franco & Ricottilli, Massimo, 2009. "Innovation and growth through local and global interaction," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 33(10), pages 1779-1795, October.
  2. John Duffy & Andreas Blume & Ted Temzelides, 2006. "Self-Organized Criticality in a Dynamic Game," Working Papers, University of Pittsburgh, Department of Economics 276, University of Pittsburgh, Department of Economics, revised Aug 2008.
  3. R. Andergassen & F. Nardini & M. Ricottilli, 2013. "Innovation diffusion, technological convergence and economic growth," Working Papers wp912, Dipartimento Scienze Economiche, Universita' di Bologna.

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