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Structural change in the presence of network externalities: a co-evolutionary model of technological successions

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  • Paul Windrum

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  • Chris Birchenhall

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Abstract

The paper uses a two-stage, multi-agent simulation model to examine the conditions under which technological successions can occur in the presence of network externalities. Data is used to identify a robust econometric model of the probability of succession. Four key factors are identified. First, the trade-off between higher direct utility from new technology goods and the network utility of old technology goods. Second, the relative innovative performance of new and old technology firms. Third, cost (price) differentials due to increasing returns in production. Fourth, the time old (new) firms have to develop their product designs prior to entry. Copyright Springer-Verlag Berlin/Heidelberg 2005

Suggested Citation

  • Paul Windrum & Chris Birchenhall, 2005. "Structural change in the presence of network externalities: a co-evolutionary model of technological successions," Journal of Evolutionary Economics, Springer, vol. 15(2), pages 123-148, January.
  • Handle: RePEc:spr:joevec:v:15:y:2005:i:2:p:123-148
    DOI: 10.1007/s00191-004-0226-8
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    Cited by:

    1. Giorgio Fagiolo & Paul Windrum & Alessio Moneta, 2006. "Empirical Validation of Agent Based Models: A Critical Survey," LEM Papers Series 2006/14, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Safarzyńska, Karolina & Brouwer, Roy & Hofkes, Marjan, 2013. "Evolutionary modelling of the macro-economic impacts of catastrophic flood events," Ecological Economics, Elsevier, vol. 88(C), pages 108-118.
    3. Windrum, Paul & Garci­a-Goñi, Manuel, 2008. "A neo-Schumpeterian model of health services innovation," Research Policy, Elsevier, vol. 37(4), pages 649-672, May.
    4. Safarzynska, Karolina & van den Bergh, Jeroen C.J.M., 2011. "Beyond replicator dynamics: Innovation-selection dynamics and optimal diversity," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 229-245, May.
    5. Safarzyńska, Karolina & van den Bergh, Jeroen C.J.M., 2017. "Integrated crisis-energy policy: Macro-evolutionary modelling of technology, finance and energy interactions," Technological Forecasting and Social Change, Elsevier, vol. 114(C), pages 119-137.
    6. Faïz Gallouj & Maria Savona, 2009. "Innovation in services: a review of the debate and a research agenda," Journal of Evolutionary Economics, Springer, vol. 19(2), pages 149-172, April.
    7. Vanessa OLTRA (GREThA UMR CNRS 5113), 2008. "Environmental innovation and industrial dynamics: the contributions of evolutionary economics," Cahiers du GREThA 2008-28, Groupe de Recherche en Economie Théorique et Appliquée.
    8. Garavaglia, Christian, 2010. "Modelling industrial dynamics with "History-friendly" simulations," Structural Change and Economic Dynamics, Elsevier, vol. 21(4), pages 258-275, November.
    9. Safarzyńska, Karolina, 2013. "Evolutionary-economic policies for sustainable consumption," Ecological Economics, Elsevier, vol. 90(C), pages 187-195.
    10. Marc Dijk & René Kemp & Pieter Valkering, 2013. "Incorporating social context and co-evolution in an innovation diffusion model—with an application to cleaner vehicles," Journal of Evolutionary Economics, Springer, vol. 23(2), pages 295-329, April.
    11. Marletto, Gerardo, 2012. "Which conceptual foundations for environmental policies? An institutional and evolutionary framework of economic change," MPRA Paper 36441, University Library of Munich, Germany.
    12. Kevin Maréchal & Hélène Aubaret-Joachain & Jean-Paul Ledant, 2008. "The influence of Economics on agricultural systems: an evolutionary and ecological perspective," Working Papers CEB 08-028.RS, ULB -- Universite Libre de Bruxelles.
    13. Marechal, Kevin, 2007. "The economics of climate change and the change of climate in economics," Energy Policy, Elsevier, vol. 35(10), pages 5181-5194, October.
    14. Marengo, Luigi & Valente, Marco, 2010. "Industry dynamics in complex product spaces: An evolutionary model," Structural Change and Economic Dynamics, Elsevier, vol. 21(1), pages 5-16, March.
    15. Kemp, R. & van den Bergh, J., 2006. "Economics and Transitions: Lessons from Economic Sub-disciplines," MERIT Working Papers 038, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    16. Safarzyńska, Karolina & Frenken, Koen & van den Bergh, Jeroen C.J.M., 2012. "Evolutionary theorizing and modeling of sustainability transitions," Research Policy, Elsevier, vol. 41(6), pages 1011-1024.
    17. Birchenhall Chris & Windrum Paul, 2014. "Global Warming: Technology, Preferences and Policy," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 366-387, April.
    18. Albert Faber & Koen Frenken, 2008. "Models in evolutionary economics and environmental policy: Towards an evolutionary environmental economics," Innovation Studies Utrecht (ISU) working paper series 08-15, Utrecht University, Department of Innovation Studies, revised Apr 2008.
    19. Jeroen C.J.M. van den Bergh & Giorgos Kallis, 2009. "Evolutionary Policy," Papers on Economics and Evolution 2009-02, Philipps University Marburg, Department of Geography.
    20. Papachristos, George, 2017. "Diversity in technology competition: The link between platforms and sociotechnical transitions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 291-306.
    21. Guseo, Renato & Guidolin, Mariangela, 2010. "Cellular Automata with network incubation in information technology diffusion," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(12), pages 2422-2433.
    22. Nathalie Lazaric & Kevin Maréchal, 2010. "Overcoming inertia: insights from evolutionary economics into improved energy and climate policy," Post-Print hal-00452205, HAL.
    23. Jeroen Bergh & Giorgos Kallis, 2013. "A survey of evolutionary policy: normative and positive dimensions," Journal of Bioeconomics, Springer, vol. 15(3), pages 281-303, October.
    24. Steinhilber, Simone & Wells, Peter & Thankappan, Samarthia, 2013. "Socio-technical inertia: Understanding the barriers to electric vehicles," Energy Policy, Elsevier, vol. 60(C), pages 531-539.
    25. repec:eee:enepol:v:108:y:2017:i:c:p:12-20 is not listed on IDEAS

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