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Diffusion in a simple classical model. Micro decisions and macro outcomes

Author

Listed:
  • Haas, David

    (University of Graz)

  • Rainer, Andreas

    (University of Graz)

Abstract

The paper explores how a single-sector economy reaches its long-period position if multiple methods of production are simultaneously in use. Firm decisions on investment and on technology provide the basis for two possible mechanisms of convergence: differential growth and imitation. Both mechanisms rely on the concept of extra profits and imply that during a period of disequilibrium economically superior methods of production gradually supersede inferior ones. The model reproduces the stylized fact of sigmoid diffusion curves and shows that diffusion leads to uneven growth with ambiguous long term effects, a change of income distribution and of the industry structure.

Suggested Citation

  • Haas, David & Rainer, Andreas, 2014. "Diffusion in a simple classical model. Micro decisions and macro outcomes," Centro Sraffa Working Papers CSWP6, Centro di Ricerche e Documentazione "Piero Sraffa".
    • Handle: RePEc:ris:sraffa:0006
    as

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    References listed on IDEAS

    as
    1. Stan Metcalfe & Ian Steedman, 2011. "Herr Schumpeter and the Classics," Papers on Economics and Evolution 2011-14, Philipps University Marburg, Department of Geography.
    2. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676, January.
    3. Horst Hanusch & Andreas Pyka (ed.), 2007. "Elgar Companion to Neo-Schumpeterian Economics," Books, Edward Elgar Publishing, number 2973.
    4. John Foster & J. Stanley Metcalfe (ed.), 2001. "Frontiers of Evolutionary Economics," Books, Edward Elgar Publishing, number 2234.
    5. Elias G. Carayannis & Aris Kaloudis & Åge Mariussen (ed.), 2008. "Diversity in the Knowledge Economy and Society," Books, Edward Elgar Publishing, number 12673.
    6. Kurz, Heinz D., 2008. "Innovations and profits: Schumpeter and the classical heritage," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 263-278, July.
    7. Richard R Nelson & Alexander Peterhansl & Bhaven Sampat, 2004. "Why and how innovations get adopted: a tale of four models," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 13(5), pages 679-699, October.
    8. Rui Baptista, 1999. "The Diffusion of Process Innovations: A Selective Review," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 107-129.
    9. John Metcalfe, 2008. "Accounting for economic evolution: Fitness and the population method," Journal of Bioeconomics, Springer, vol. 10(1), pages 23-49, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Sraffa; Schumpeter; classical economics; diffusion; replicator dynamics;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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