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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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  1. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  2. Iwai, Katsuhito, 2000. "A contribution to the evolutionary theory of innovation, imitation and growth," Journal of Economic Behavior & Organization, Elsevier, vol. 43(2), pages 167-198, October.
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  8. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  9. Franke, R., 2001. "Wave trains, innovation noise, and long waves," Journal of Economic Behavior & Organization, Elsevier, vol. 45(1), pages 49-68, May.
  10. Philip Auerswald & Stuart Kauffman & Jose Lobo & Karl Shell, 1998. "The Production Recipes Approach to Modeling Technological Innovation: An Application to Learning By Doing," Working Papers 98-11-100, Santa Fe Institute.
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Cited by:
  1. R. Andergassen & F. Nardini & M. Ricottilli, 2013. "Innovation diffusion, technological convergence and economic growth," Working Papers wp912, Dipartimento Scienze Economiche, Universita' di Bologna.
  2. Blume, Andreas & Duffy, John & Temzelides, Ted, 2010. "Self-organized criticality in a dynamic game," Journal of Economic Dynamics and Control, Elsevier, vol. 34(8), pages 1380-1391, August.
  3. R. Andergassen & F. Nardini & M. Ricottilli, 2008. "Innovation and growth through local and global interaction," Working Papers 637, Dipartimento Scienze Economiche, Universita' di Bologna.

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