Control of SO2 emissions from power plants: A case of induced technological innovation in the U.S.

This paper investigates how the details of government actions induce innovation—the overlapping activities of invention, adoption and diffusion, and learning by doing—in “environmental technology,” products and processes that either control pollutant emissions or prevent emissions altogether. It applies multiple quantitative and qualitative measures of innovation to a case subject to several “technology-push” and “demand-pull” instruments: sulfur dioxide control technology for power plants. The study employs analyses of public R&D funding, patents, expert interviews, learning curves, conference proceedings, and experience curves. Results indicate that: regulation and the anticipation of regulation stimulate invention; technology-push instruments appear to be less effective at prompting invention than demand-pull instruments; and regulatory stringency focuses inventive activity along certain technology pathways. Increased diffusion of the technology results in significant and predictable operating cost reductions in existing systems, as well as notable efficiency improvements and capital cost reductions in new systems. Government plays an important role in fostering knowledge transfer via technical conferences, as well as affecting the pattern of collaborative relationships within the technical research community via regulatory changes that affect the market for the technology. Finally, the case provides little evidence for the claim that cap-and-trade instruments induce innovation more effectively than other instruments.     

Will low technology products disappear?: The hidden innovation processes in low technology industries

Political discussions and analyses have usually been devoted to an understanding of the development of high technology products, although low technology products have dominated the industrial structure of the Organization for Economic Cooperation and Development (OECD) countries. The important role of low technology products in these countries raises the question of whether we can observe a technological paradox in the industrial structure of the more advanced nations, the dominant role of this sector in spite of its competitive disadvantages because of high wages. Using the Danish packaging industry as an example, a central thesis in the article is that innovation processes are important in low technology industries. They are also often an integrated part of the marketing and production functions of the firm. The innovation processes in the low technology industries are therefore too complex for traditional R&D analyses to handle. The article points out that—especially in small firms—the “practical man” and his “tacit knowledge” play a very central role in both product and process development, and that low technology, even in the future, will play a central role in the industrial structure of the OECD countries.     

Binomial innovation diffusion models with dynamic potential adopter population

Models for describing the time pattern of the diffusion processes for innovations are used by researchers in various disciplines. These models are in general binomial models—binomial in the sense that they focus their attention on two causal variables: 1) that part of the population who have already adopted the innovation, and 2) the rest of the population who are potential adopters. However, these models have a serious limitation in that the potential adopter population is assumed to remain constant over time. This paper presents some modified binomial innovation diffusion models that incorporate dynamic potential adopter populations. Moreover, the developed models are applied to some case studies, and their superiority in forecasting the time pattern of diffusion is also included in this presentation.     

Innovation diffusion models expressing asymmetry and/or positively or negatively influencing forces

Two different characteristics of the innovation diffusion process, that is, the asymmetry and the appearance of positively or negatively influencing forces, are analyzed. Related diffusion models in use are presented and new generalized models are formulated. A five-parameter model is proposed in order to cover the above two different characteristics of innovation diffusion. The properties of this model and other related diffusion models are examined and the appropriate iterative nonlinear regression analysis technique is developed. Five comparative applications follow, predictions are made, as are comparisons between two generalized models—GRM₁ and Von Bertalanffy—that express asymmetric diffusion behavior.     

Contracts and externalities: How things fall apart

A single principal interacts with several agents, offering them contracts. The crucial assumption of this paper is that the outside-option payoffs of the agents depend positively on how many uncontracted or “free” agents there are. We study how such a principal, unwelcome though he may be, approaches the problem of contract provision to agents when coordination failure among the latter group is explicitly ruled out. Two variants are considered. When the principal cannot re-approach agents, there is a unique equilibrium, in which contract provision is split up into two phases. In phase 1, simultaneous offers at good (though varying) terms are made to a number of agents. In phase 2, offers must be made sequentially, and their values are “discontinuously” lower: they are close to the very lowest of all the outside options. When the principal can repeatedly approach the same agent, there is a multiplicity of equilibria. In some of these, the agents have the power to force delay. They can hold off the principal's overtures temporarily, but they must succumb in finite time. In both models, despite being able to coordinate their actions, agents cannot resist an “invasion” by the principal and hold to their best payoff. It is in this sense that “things [eventually] fall apart”.     

Use diffusion: An extension and critique

This study demonstrates that exponential modeling applies to the diffusion of foods. By using per capita data rather than gross consumption data, we show that this exponential process is not an artifact of a simultaneous population increase. However, whereas previous researchers predict that use diffusion continues indefinitely though at decreasing rates from one time period to the next, the present study demonstrates that it can end or even reverse, as well as attenuate. The extension of reinforcement theory in psychology to “social learning” theory is rejected as an explanation of this change, and the alternative “technological substitution” model is discussed.     

Scarcity and appropriative competition

This paper formalizes the commonsensical hypothesis that resource scarcity causes a large allocation of time and effort to appropriative competition. Our main innovation is to model explicitly the positive intertemporal effect of consumption on the probability of survival. The critical assumption is that this effect becomes stronger as resources become scarcer. We also show that anticipated future resource abundance increases the incremental value of survival and, consequently, amplifies the current allocation of time and effort to appropriative competition. Interestingly, if resources are currently scarce, then larger anticipated future abundance can cause a big enough increase in the time and effort allocated to appropriative competition to result in a decrease in the sum of current and expected future utility, a “paradox of anticipated abundance”.     

Coping with Technology Divergence Policies and Strategies for India’s Industrial Development

Recent studies on innovation have demonstrated the relationship between technology and growth. However, as most of them are centered on the experience of the highly industrialized nations, a different approach to technology policy must be taken. As late industrializers, developing countries lag in adopting foreign technologies. Institutional factors and economic policy also influence the diffusion process. With decentralized decision making, the coexistence of diverse technologies in a given industrial branch is inevitable. Consequently, social costs tend to be high because of duplication of efforts, reduced learning opportunities, and adoption of inefficient technologies. This article examines the coexistence of diverse technologies leading to technology fragmentation in India’s steel industry. Recent innovative behavior in the Japanese and Korean steel industry indicates that the effects of fragmentation can be contained through a policy of “system integration.” This is an institutional process by which industry-specific applications of scientific knowledge are fused with basic research itself. This demands a forward-looking policy that rejuvenates older industries, such as steel, in socially acceptable ways and organically creates new knowledge for national development and social welfare.     

Leaders in change : Solar energy owners and the implications for future adoption rates

Information on the characteristics of the initial wave of homeowners who installed solar energy systems is presented and then used to anticipate future solar market penetration patterns. Surveys of these adopters reveal high education and income levels; professional and executive occupations; economic, energy saving, and environmental concern as the principal purchase motivations; and high satisfaction levels. As a group, these individuals conform to the “early adopter” type identified in innovation diffusion research rather than the “innovator” type that would be expected at this early stage of commercialization. This characteristic, the influence of economic motivations, owners' high satisfaction levels, and the findings of other surveys indicate that widespread solar system adoption is probable if the initial high cost barrier can be reduced.     

Exchange rate changes and endogenous terms of trade effects in a small open economy

This paper shows that the small-country assumption of dependent-economy models is unlikely to hold for many of the cases in which this class of models is used, for example, in the analysis of a terms of trade shock in the “commodity currency” models. When a shock affects most or all of the small countries exporting a commodity, the combined exchange rate effects will result in endogenous terms of trade changes even for those countries too small to individually affect world markets. The paper also explores the possible implications of these secondary terms of trade changes for the dependent-economy models.     

Is error learning behaviour stabilizing?

It is very commonly admitted that error-learning behaviour in general improves the stability of dynamical economic evolutions. We show here, in the context of Temporary General Equilibrium Theory, that such an intuition is not true, in the sense that “most often,” for a large class of models, learning does not assuredly leads to more stable dynamics. The presentation of the problem then allows for a discussion of the type of hypothesis—very high levels of information or very careful behaviours—which can invalidate such a conclusion.     

R&D cluster quality measures and technology maturity

“Innovation indicators” strive to track the maturation of an emerging technology to help forecast its prospective development. One rich source of information is the changing content of discourse of R&D, as the technology progresses. We analyze the content of research paper abstracts obtained by searching large databases on a given topic. We then map the evolution of that topic's emphasis areas.The present research seeks to validate a process that creates factors (clusters) based on term usage in technical papers. Three composite quality measures—cohesion, entropy, and F measure—are computed. Using these measures, we create standard factor groupings that optimize the composite term sets and facilitate comparisons of the R&D emphasis areas (i.e., clusters) over time.The conceptual foundation for this approach lies in the presumption that domain knowledge expands and becomes more application specific in nature as a technology matures. We hypothesize implications for this knowledge expansion in terms of the three factor measures, then observe these empirically for the case of a particular technology—autonomous navigation. These metrics can provide indicators of technological maturation.     

Modelling the faddish, fashionable and efficient diffusion of agricultural technologies: A case study of the diffusion of wool testing technology in Australia

This study investigates the nature of innovation diffusion in an agricultural context. The dominant agricultural diffusion models assume that an economically rational choice is made to adopt or reject agricultural technologies. However, recent studies of agricultural innovation highlight the ‘irrational’ and potentially ‘inefficient’ nature of the diffusion in this context. To investigate how and why agricultural technologies are adopted or rejected, we examine the diffusion of wool testing technologies in the Australian wool industry using the Bass diffusion model and Abrahamson's diffusion and rejection typology. The results show that diffusion of agricultural innovation is not simply an efficient choice made to close observable performance gaps. The findings suggest that the adoption of inefficient innovations and the rejection of efficient innovations can be driven by an adopter's social context, powerful external influences and imitation within an adopter group and that these drivers change over time, suggesting an evolutionary social process underlies the diffusion of agricultural technologies.     

The mature region building a practical model for the transition to the sustainable society

The demographic shift from the northeast to the “sunbelt” has resource implications that will span several decades. Early in the 21st century, today's “boom” regions will be significantly affected by declining petro-energy and an aging population and infrastructure. The northeast is now in an analogous situation.The transition to the sustainable society is unlikely to occur in the sunbelt while the boom is on, but the need for sustainability is immediate in the northeast. For the mature industrial states, economic survival is tied to the level of self-sufficiency they can achieve in the 1980s and 1990s. The efforts toward greater regional sustainability can offer practical models to regions yet to encounter cyclical decline. The transition to the sustainable society will be built on the aggregated efforts of regions to bring their unique circumstances into balance.New England is presented as the case study of a mature region, no longer growing, but embarking in measurable ways on a path toward regional sustainability. The model focuses on the recapture of resources that have traditionally sustained the region—the landscape, the 19th century settlement pattern, and the educational establishment.The inquiry is directed to practical efforts now being made by the private sector to readapt these traditional resources and increase New England's self-sufficiency. The paper will examine the significance of New England private sector endeavors, for effects on other regions, demonstration value and transferability, and conditions that merit continuing investigation as models for the transition to the sustainable society.     

Learning to Learn, Pattern Recognition, and Nash Equilibrium

The paper studies a large class of bounded-rationality, probabilistic learning models on strategic-form games. The main assumption is that players “recognize” cyclic patterns in the observed history of play. The main result is convergence with probability one to a fixed pattern of pure strategy Nash equilibria, in a large class of “simple games” in which the pure equilibria are nicely spread along the lattice of the game. We also prove that a necessary condition for convergence of behavior to a mixed strategy Nash equilibrium is that the players consider arbitrarily long histories when forming their predictions.Journal of Economic LiteratureClassification Numbers: C72, D83.     

A prospective on macrocybernetic process management systems

In an editorial in the February 1996 issue of Technological Forecasting and Social Change Professor Linstone noted that “the rapid pace of technology has not been matched by the pace of human change.” Were we to drop our perspective a bit lower, a similarly troublesome imbalance within technology itself becomes apparent: the rapid rate of increase in the complexity of process-related technologies relative to the much slower rate of increase in the sophistication of process control systems. The conclusion at which most technological forecasts seem to arrive is that there will be a continuation—perhaps even an acceleration—of the trend toward more intricate and sweepingly extensive processes (production-related and otherwise). If so, there is the specter of a steadily increasing shortfall between requirements and capabilities, and hence the likelihood of even grander technological embarrassments. This article considers two ways in which this shortfall might be kept in check. Increases in the intricacy of processes can be met, and to a considerable extent are already being met, by exchanging conventional process control facilities for enhanced alternatives. Less certain is how expansions of project scope might best be accommodated. One possibility is to consider exchanging process control systems for broader-purview process management systems. Hence the focus in this article is on prospects for the development of macrocybernetic constructs.     

Can Japan succeed in “Chigyo-ka” (intelprise-formation)?

There are two aspects in today's information revolution that started in the late 1970s. The first is an aspect referred to as “the third industrial revolution,” which triggers the transition to the “21st century system of Industrialization.” The information revolution in this sense brings the creation of new “breakthrough industries (new multimedia industries).” And the second aspect of the information revolution possesses the characteristics of both a technological revolution and a social revolution and brings about the arrival of the third phase of the historical evolutionary process of the modern civilization, which proceeds through three phases, namely “militarization, industrialization, and then informatization.”If the bearers of modern industrialization are a “group of enterprises” that have been engaged in the race in order to gain “wealth” (generalized means of exchange/exploitation power), and if these enterprises' activities have been exercised in the world market where their products have been sold, then it is appropriate to call the bearers of informatization a “group of intelprises.” They will be engaged in the race to gain “wisdom” (generalized means of persuasion/induction power), then stages of their activities can be called a “global intelplace” where “sharables,” that is, information and knowledge, will be disseminated. And now, toward the 21st century, the third phase of modernization, which can be called the “informatization/intelprise formation” or the “wisdom game” (intellectualism), is about to begin.Japan's “ie society (a society based on the ie principle—literally, it means “house” but here it is interpreted as cultural principle for organizing a society), which has been going through the process of evolution on the Japan Archipelago, has developed a network-based organization with little stratification within its infrastructure. In this sense, Japanese society can be characterized as a “network-oriented society” in which intelprises and an intelplace in the broad sense have functioned as the essential components of the society since Middle Ages. In general, an intelplace and intelprises that operate actively within this framework serve as the flexible bases for different types of social relations and institutions, such as states and markets and eventually integrate these into the society to a certain extent. In fact, it took place quite regularly during the modernization “in the narrow sense,” or Westernization of Japanese society after the Meiji Restoration. There exist some problems, however. Some of the characteristics found in Japanese society may become obstacles to activities aimed at the sharing and promotion of information and knowledge in the global intelplace and Japanese participation in the “wisdom game.” Badly needed are serious efforts for Japanese intelprise-formation to reduce these obstacles as much as possible.     

Escaping Poverty: Risk-Taking and Endogenous Inequality in a Model of Equilibrium Growth

Recent macroeconomic models of income distribution generate equilibria characterized as poverty traps. These models specify a production indivisibility such that, due to problems of asymmetric information in credit or capital markets, poor agents are never able to acquire the resources necessary to overcome the indivisibility. In the context of an equilibrium growth model, this paper demonstrates that faced with such constraints, poor, risk-averse agents have incentives to voluntarily take on risk in the hopes of exiting poverty. Each period they remain in poverty, they sacrifice a small amount of current consumption to pool resources for this risky activity. Risk-taking, economic mobility, and the distribution of income are generated endogenously. Furthermore, beginning from identical endowments, “initial” inequality also emerges endogenously. It is shown that voluntary risk-taking eliminates many potential steady-state equilibria of this and other models—those that exhibit individual poverty traps. All agents (or dynasties) expect to escape at some future date, perhaps after an extended spell in poverty.     

Coherent behavior in noncooperative games

A new concept of mutually expected rationality in noncooperative games is proposed: joint coherence. This is an extension of the “no arbitrage opportunities” axiom that underlies subjective probability theory and a variety of economic models. It sheds light on the controversy over the strategies that can reasonably be recommended to or expected to arise among Bayesian rational players. Joint coherence is shown to support Aumann's position in favor of objective correlated equilibrium, although the common prior assumption is weakened and viewed as a theorem rather than an axiom. An elementary proof of the existence of correlated equilibria is given, and relationships with other solution concepts (Nash equilibrium, independent and correlated rationalizability) are also discussed.     

Innovation diffusion with generation substitution effects

Markets of high technology products and services, such as telecommunications, are described by fast technological changes and rapid generational substitutions. Since the conventional modeling approaches that are based on diffusion models do not usually incorporate this important aspect into their formulations, the accuracy of the provided forecasts is consequently affected. The work presented in this paper is concerned with the development of a methodology for describing innovation diffusion, in the context of generation substitution. For this purpose, a dynamic diffusion model is developed and evaluated, based on the assumption that the saturation level of the market does not remain constant throughout the diffusion process but is affected by the diffusion of its descendant generation, as soon as the latter is introduced into the market. In contradiction to the conventional diffusion models, which assume static saturation levels, the proposed approach incorporates the effects of generation substitution and develops a diffusion model with a dynamic ceiling. The importance of such an approach is especially significant for markets characterized by rapid technological and generational changes. Evaluation of the proposed methodology was performed over 2G and 3G historical data and for a number of European countries, providing quite accurate estimation and forecasting results, along with important information regarding the rate of generation substitution.