The Innovation impact model: a tool t0 study the impact of technological change

In the spirit of the US Malcolm Baldridge Quality Award, companies try to develop a strategy towards improving their operations. These companies look for assistance in assessing how new technology will help. While literature looks at innovations from different perspectives, the impact of innovations is rarely studied. This article offers the 'Innovation Impact Model' as a tool to help companies visualize the effects of innovations on their performance and competitive situation. Three example are provided in which the Innovation Impact Model has been applied. First, the impact of basic oxygen furnaces on the national steel industries of Japan, West Germany, and the USA is examined. Second, the impact of eletric are furnaces on the development of production costs at the Atlantic Steel Plant in Atlanta is studied. Finally, it is shown how 'voluntary restraint agreements' in the early 1970s had only a tempoorary impact on improving the trade postion of the US steel industry.     

The Weibull distribution as a general model for forecasting technological change

This paper presents a simple and widely applicable model for technological forecasting using the Weibull distribution function. It shows the generality of the Weibull function, which can accommodate different patterns of technological change. A method for estimating parameters and some applications are presented to illustrate the usefulness of the model.     

REXS: A forecasting model for assessing the impact of natural resource consumption and technological change on economic growth

This paper describes the development of a forecasting model in the tradition of system dynamics. It is called Resource EXergy Services (REXS). The model simulates economic growth of the US through the 20th century and extrapolates the simulation for several decades into the next century. The REXS model differs from previous energy–economy models such as DICE and NICE [Nordhaus, W.D., 1991. The cost of slowing climate change: a survey. The Energy Journal 12 (1), 37–66] by eliminating the assumption of exogenously driven exponential growth along a so-called ‘optimal trajectory’. Instead, we suggest a simple model representing the dynamics of technological change in terms of decreasing energy (exergy) intensity and endogenously increasing efficiency of conversion of raw material and fuel inputs (exergy) to primary exergy services (‘useful work’).In our model, the traditional assumption of exogenous technological progress (total factor productivity) increasing at a constant rate is replaced by two learning processes based, respectively, on (i) cumulative economic output and (ii) cumulative energy (exergy) service (useful work) production experience. The initial results of simulation for the period 2000–2050 have significant implications for future trends in economic output. These implications are important for purposes of scenario analysis. The REXS modules are the focus of ongoing research. We discuss briefly the many possibilities for elaboration of each module to enrich the feedback dynamics, policy levers and post-scenario analyses.     

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

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.JEL Classification: O30, C15 Correspondence to: Paul WindrumThe authors would like to thank Richard Nelson and Uwe Cantner for their helpful comments on an earlier draft of the paper, and for the comments provided by the anonymous referees. The usual disclaimers apply. The authors gratefully acknowledge supportive funding through SEIN-Project, European Commissions Framework 4 Programme (contract# SOEI-CT-98-1107) and through the Policy Regimes and Environmental Transitions (PRET) project funded by the Dutch Scientific Research Council (NWO).     

Population growth and technological change in a global warming model

Global warming (GW) is now recognized as a significant threat to sustainable development on an international scale. After providing some introductory background material, we introduce a benchmark dynamic game within which to study the GW problem. The model allows for population growth and is subsequently generalized to allow for changes in technology. In each case, a benchmark “Business as Usual” (BAU) equilibrium is analyzed and contrasted with the efficient solution. Furthermore, a complete characterization is provided in the benchmark model of the entire subgame perfect equilibrium value correspondence.JEL Classification Q54, D99, O12This paper builds on the Woytinsky Lecture delivered by Roy Radner at the University of Michigan, March 11, 1998. We would like to thank Graciela Chichilnisky, Arnulf Grubler, Geoffrey Heal, Leonid Hurwicz, Jill Jaeger, Peter de Janosi, Paul Kleindorfer, Giuseppe Lopomo, Thomas Schelling, Tapan Mitra, and Michael Toman for helpful discussions and references, and Andrew King, Charlotte V. Kuh, and Frank Sinden for comments on an earlier draft. In the case of the present enterprise, much of whose scope lies outside of our previous expertise, it is even more important than usual to emphasize that we are responsible for all errors.     

Endogenous technological change: a note on stability

Summary. This paper demonstrates that the steady-state solution of the optimal-growth problem in Romer's (1990) model of endogenous technological change is globally saddle-point stable. Surprisingly, the proof of this result is trivial. Interest in the optimal growth path is justified by the fact that there is a (unique) combination of production and R&D subsidies by means of which the optimal growth path is attained as a market equilibrium. Received: October 6, 1998; revised version: April 19, 1999     

The state of technological and social change: Impressions

As the long-wave theory has predicted, we are seeing a period of consolidation in which the pace of radical technological innovation seems exceeded by the pace of social change. Peter Drucker's dictum, that technology changes faster than society, appears now to have been reversed. The article offers research and anecdotal support for these assertions, linking them to specific trends and trend interactions, including patents and intellectual property litigation, new product development, and politics and revolution.     

The normal distribution as a model of technological substitution

A model for forecasting technological substitution, based on the use of the normal distribution, is presented. Both mathematical and graphical techniques are discussed. Examples from the literature are used to illustrate the model.     

An econometric model of structural change: a case study of Canada

The study postulates that structural change in a resource-based economy can, in large part, be explained by the behaviour of the relative wages. Different wage responses in tradeable and non-tradeable sectors create, over the course of the business cycle, a ‘ratchet effect’ which gradually squeezes the tradeable sector relative to the non-tradeable sector. Although the analysis is undertaken mainly within the Dutch-disease framework, an econometric model incorporating key elements of various views on the subject is tested for Canada. The results are consistent with the predictions of the model.     

An approach to the construction of indexes of technological change and of technological sophistication : The case of agricultural tractors

Two indicators of the output of technological innovation have been developed for the case of agricultural tractors. The tractor is a multicharacteristic product, and a fundamental problem in measuring its technological sophistication or technological change is to determine the relative weights of different characteristics. These relative weights have been approximated by the coefficients of a regression of tractor price with respect to tractor technical characteristics. The indicators developed allow one to measure technical change over time or the relative technical sophistication of different tractor models or tractor firms at a given moment. These indicators can be applied only to multicharacteristic products with easily quantifiable characteristics. However, products that satisfy these requirements account for a very large share of the market for industrial goods. These indicators can be useful in assessing the efficiency of R&D, in analyzing the influence of technological innovation on patterns of trade, and in determining the contribution of changes in the quality of capital goods employed to increases in industrial productivity.     

The empirical analysis of the determinants for environmental technological change: A research agenda

Technological change is usually considered a necessary albeit not sufficient condition for a transition to sustainability. However, the empirical analysis of the determinants to environmental technological change has not received too much attention in the environmental/ecological economics literature and many open questions remain in this context. Based on a careful review of the literature, this paper argues that further analysis should address several issues at different levels: i.e., regarding the conceptual framework, the thematic scope of the studies, some methodological issues and other aspects related to the environmental policy variable. First, an integrated conceptual framework which takes into account the interplay between relevant variables influencing environmental technological change (i.e., factors internal and external to the firm and characteristics of the environmental technologies) and all the stages of this process, with a greater emphasis on the invention stage, should be developed. Other aspects should then be tackled, including a focus on several themes (i.e., a greater attention to cross-sectoral technologies, the barriers to different types of environmental technologies, the international dimension of environmental technological change and environmental technological change in small and medium size enterprises), methodological issues (combination of case studies and econometric modelling) and several issues related to the environmental policy variable.     

Policy trade-off in the long run: A new Keynesian model with technological change and money growth

In this study, we introduce a constant rate of technological change and money growth into the standard new Keynesian model, in which both prices and nominal wages are supposed to be sticky. Using such a model, we examine whether a policy trade-off exists between curbing inflation and stabilizing the welfare-relevant output gap in the steady state. If we take only price stickiness into consideration, a policy trade-off does not occur. However, if both nominal wage stickiness and price stickiness are taken into consideration, a policy trade-off occurs.     

DRAMs as model organisms for study of technological evolution

The short, well-documented market life of generations of dynamic random access memory (DRAM) computer chips makes them an excellent “model organism,” like the fruit fly, for study of evolution, in this case technological. Using classic models of logistic growth, substitution, and learning, we examine the global dynamics of eight generations of DRAMs and forecast the market characteristics of the next DRAM generations.     

The boundaries of firms in the new economy: M&As as a strategic tool toward corporate technological diversification

Following the dynamic capabilities approach, we understand the recent wave of M&As as a corporate strategy mainly stimulated by the increasingly complex and uncertain techno-socio-economic environment in which firms operate. In this new situation, the boundaries of firms are in greater flux since firms are unable to develop individually all the competencies required to keep pace with the continual redefinition of business lines being driven by corporate competition. Using US patents granted to the world's largest firms, this paper analyses the dynamics of the sectoral specialisation of corporate technological profiles following large shocks that require some M&A deal. The findings of the analysis enable us to evaluate the adoption of M&As as a strategic tool to reshape corporate technological boundaries. On these grounds, we are able to identify patterns of technological diversification into strategic fields according to different models of industrial technological development.     

Determinants of technological change in the service industries

The Service Industries provide numerous examples of how technological change may be impeded. Either the economic state of the industry or the state of scientific and engineering knowledge can limit inventive activity and productivity advance. Consumer ignorance, lack of producer incentives, complex production interdependencies, and market fragmentation are only a few factors limiting the role of demand in stimulating the discovery and diffusion of new services and production techniques. On the cost side, technical uncertainty, time horizons, and discount rates affect decisions to engage in R & D. In addition, strategic market considerations, such as potential entry, reaction speeds of rivals, and numbers of competitors affect the benefits from early introduction of new technologies. These institutional and economic considerations need to be taken into account for technological forecasting related to the Service Industries.     

The network of networks: Localized technological change in telecommunications and productivity growth

Radical innovations in the usage of telecommunication services have drastically changed the role of telecommunications in the economy. Today the usage of telecommunications services is associated with the opportunity to extract significant quasi-rents. An empirical analysis of the Italian case in the mid-eighties confirms the significant difference between telecommunications cost share and marginal productivity levels. The opportunity to reap transient quasi-rents has in turn pushed users to innovate so as to become major players in the arena of technological change in telecommunications and information technologies. In this context the notion of network of networks, implemented in the European Union, seems most appropriate to push the dynamic efficiency of the system and accommodate both centrifugal and centripetal innovations, yet also to retain network interoperability and interconnectivity.     

Understanding economic change: the impact of emotion

In this paper we aim to conceptualize the involvement of emotion in the processes of institutional emergence and change. The starting point of our proposal is the theory of change that has been developed by Douglass North since the 1990s and has recently culminated in the publication of “Understanding the process of economic change” (2005). We agree with North in considering change as an endogenous process which starts in the individual mind through a modification of mental models and beliefs. However, notwithstanding the value that North attributes to the cognitive components of change, his approach assigns no specific role to emotion. Based on recent findings on emotions and their contribution to the process of thought, we will suggest how North’s approach may be extended in order to explore some basic mechanisms of the interaction between institutions and feelings.     

The clean development mechanism versus international permit trading: The effect on technological change

The clean development mechanism of the Kyoto Protocol may induce technological change in developing countries. As an alternative to the clean development mechanism regime, developing countries may accept a (generous) cap on their own emissions, allow domestic producers to invest in new efficient technologies, and sell the excess emission permits on the international permit market. The purpose of this article is to show how the gains from investment, and hence the incentive to invest in new technology in developing countries, differ between the two alternative regimes. We show that the difference in the gains from investment depends on whether the producers in developing countries face competitive or noncompetitive output markets, whether the investment affects fixed or variable production costs, and whether producers can reduce emissions through means other than investing in new technology.