Adaptive technological substitution models

This article demonstrates the use of feedback estimation approaches to develop self-adaptive innovation diffusion models for forecasting technological substitution. Data from three innovations are analyzed, and limitations of the proposed procedures are discussed.     

Technological learning,technological substitution,and technological change

From a simple dynamic model of competition between product lines it is shown that the shape of learning curves has a powerful influence on the dynamics of technological substitution. Learning of both production efficiency and marketing efficiency is considered. It is asserted that both types of learning are important and that the two are complementary. It is further speculated that production learning is probably more important for commodities and in situations of low per capita income, whereas market learning gains ascendancy in cases of high income and specialized and diversified product lines. In closing, it is noted that simple competitive models are misleading, first because complementarities and coevolutionary processes are probably as important in the overall development of technology as are competitive processes, and second because optimization of the technological system's parts does not guarantee improvement of the performance of the system as a whole.     

Determinants for forecasting technological substitution

This paper investigates the factors determining the rate of technological substitution and evaluates the prospects for forecasting models based on market-share data only. Studies on underlying causes for the substitution of one technology or product by another reveal the frequent presence of a number of factors. These factors are first discussed in general terms so as to establish their causal relationships with the rate of substitution. On the basis of the identified cause-effect relationships, a composite model is formulated that incorporates the impact of individual factors in a combination of additive and multiplicative interactions. The relative importance and sensitivity of different factors in describing the behavior of the substitution process is then studied through a system-dynamics application of the model. Finally, using three specific cases, a comparison is given between the forecasts made by the comprehensive model, incorporating factors that are known to have significant impact on the rate of substitution, with that of a generalized model for forecasting technological substitution.     

A generalized model for forecasting technological substitution

This paper presents a generalized mathematical model for forecasting technological substitution under a wide variety of circumstances. Some of the existing models are shown as special cases of the generalized model. Methods are also suggested for improving the reliability of the model by taking corrective measures on the available data and following a step-wise forecasting procedure.     

Generalized Lotka-Volterra equations and the mechanism of technological substitution

This paper demonstrates that if technological substitution is viewed as the result of competition between old and new technology in which new technology wins, and if generalized Lotka-Volterra equations are taken to describe this competition, then various models of technological substitution can be obtained as very special cases. It is argued that this could lead to a better understanding of the substitution process itself.     

A nonsymmetric responding logistic model for forecasting technological substitution

This article presents a simple model of technological substitution termed as nonsymmetric responding logistic (NSRL). Based on the theory that substitution is an imitation process, the model can accommodate different patterns of technological substitution by allowing the imitation effect to vary over time systematically. It allows the S-curve to be symmetrical as well as nonsymmetrical, with the point of inflection responding to the substitution process. Data from four medical innovations are analyzed to illustrate the generality of the model.     

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.     

Fiscal competition in space and time

This paper analyzes fiscal competition among numerous spatially-separated jurisdictions in an explicitly dynamic framework. The degree of factor mobility between jurisdictions is imperfect because it is costly and time-consuming to adjust factor stocks. Even if it is harmful in the long run, taxation of mobile factors redistributes income in favor of the owners of immobile resources in the short run. The locally-optimal tax on mobile factors is lower, the faster the speed with which factors adjust to fiscal policy. Anticipated taxes are less beneficial than those that can be imposed unexpectedly.     

Estimating substitution elasticities in household production models

Summary Dynamic general equilibrium models that include explicit household production sectors provide a useful framework within which to analyze a variety of macroeconomic issues. However, some implications of these models depend critically on parameters, including the elasticity of substitution between market and home consumption goods, about which there is little information in the literature. Using the PSID, we estimate these parameters for single males, single females, and married couples. At least for single females and married couples, the results indicate a high enough substitution elasticity that including home production will make a significant difference in applied general equilibrium theory.We thank the National Science Foundation for financial support, and Ellen McGrattan, David Runkle, George Jakubson, Zvi Eckstein, Timothy J. Kehoe, Ed Prescott, a referee, and seminar participants at the Cleveland Fed and the Penn Macro Lunch Group for comments. The views expressed here are those of the authors and not necessarily those of any Federal Reserve Bank or the Federal Reserve System.     

Creativity over time and space

Creativity is often highly concentrated in time and space, and across different domains. What explains the formation and decay of clusters of creativity? We match data on notable individuals born in Europe between the eleventh and the nineteenth centuries with historical city data. The production and attraction of creative talent is associated with city institutions that protected economic and political freedoms and promoted local autonomy. Instead, indicators of local economic conditions such as city size and real wages, do not predict creative clusters. We also show that famous creatives are spatially concentrated and clustered across disciplines, that their spatial mobility has remained stable over the centuries, and that creative clusters are persistent but less than population.

     

The automobile road to technological change : Diffusion of the automobile as a process of technological substitution

Advancement of the motor vehicle and its production methods is analyzed as a process of technological change. In a broader context, motor vehicles evolved as an integral component of road transportation through a series of interlaced substitutions of old by new technologies. Building on a large number of studies that described technological substitution processes, first it is shown how new energy forms replaced their predecessors and how the old marine-transport technologies were substituted by new ones. These examples constitute some of the oldest, empirically documented technological changes and show that many events in the dynamics of energy substitution and marine transport are related to technological changes in road transportation. It is shown that these substitution processes can be described by simple rules and that the replacement of old by new technologies in the energy and transport systems lasted about 80 years. The technological changes within road transportation, however, were more rapid. Replacement of horses by automobiles and older by newer generations of motor vehicles and production methods lasted only a few decades in the United States. Thus, technological substitutions within the road-transportation system were considerably shorter than the expansion of railroads, surfaced roads, all road vehicles together, and the more recent expansion of air transportation.     

A procedure for adapting technological forecasting models

A simple procedure is presented for adapting available mathematical models for forecasting technological substitution. The procedure takes into consideration the strengths and weaknesses of the available models and the environmental interactions to identify a set of feasible alternative forecasts, from which a selection is to be made by the decision-maker based on judgement.     

Analysis of the Lotka-Volterra competition equations as a technological substitution model

This paper provides insight into the dynamics of the Lotka-Volterra competition (LVC) equations, a much used competition model, and compares the dynamics of LVC competitive substitution to that of several well-known substitution models. The behavior of the LVC equations is analyzed for the special case of a dominant competitor at equilibrium being replaced after the introduction of a small population of an invading competitor with a competitive advantage. Expressions are derived that describe the growth of the invading competitor and that growth is shown to be of four classes: left asymmetric, logistic, right asymmetric with 1−ε₂ asymptote and right asymmetric with γ asymptote. It is shown that the LVC model reverts to logistic substitution in a market of fixed size, a result with important implications. The LVC equations are fitted to the Gompertz, Bass, Non-Symmetrical Responding Logistic (NSRL) and Sharif-Kabir substitution models and compared using a novel graphical technique. The LVC equations can reasonably mimic the full range of curve shapes exhibited by each of these models.     

Forecasting technological substitution: The logistic model of energy systems revisited

A simple logistic model of market substitution has been applied to situations where price and cost parameters vary in time. In such cases the market share does not necessarily evolve as a monotonous function of time. Although this particular feature of the model has not been validated against data from past experience, it can be applied heuristically to studying future trends in market penetration. As an example, possible competition patterns of coal and nuclear power as primary fuels for electricity production have been examined under various combinations of economical parameters. The illustrative results involve both cases where the nuclear contribution would be phased out as well as those where nuclear power could still maintain a strong position a few more decades to come.     

Combined forecast process: Combining scenario analysis with the technological substitution model

Forecasts can be improved by combining separate forecasts obtained by different methods. The complementary nature of the scenario analysis and technological substitution models means that combining the two can obtain improved forecasts. The former has the strength of dealing with the uncertain future, while the later offers data-based forecasts of quantifiable parameters. This study thus proposes a process for combining the scenario analysis with the technological substitution model for discussing new generation technological developments. The proposed process not only has the strengths of scenario analysis, but also contains features that scenario analysis lacks, including predicting annual developments for future years, considering old technology development, and forecasting substitution of old technologies. This study uses the forecast of the market share of Fiber to the x in Taiwan over the next ten years as an example illustrating the proposed combined forecast process.     

General equilibrium models with Morishima elasticities of substitution in production

Analytical general equilibrium (AGE) models are important tools that economists use to answer questions about theory and policy. When a production function has three or more inputs, the traditional modeling technique employs Allen elasticities of substitution to represent general functional forms. This paper builds an analytical general equilibrium model using the Morishima elasticity of substitution (MES). Specifically, an existing model using Allen elasticities is reformulated to employ the MES and the new, closed-form solutions are interpreted with additional insights from the reformulation. Importantly, the special case of constant elasticity of substitution (CES) production follows directly when using Morishima elasticities, but not Allen elasticities. This paper also provides a general technique for switching from Allen to Morishima elasticities in any existing AGE model and demonstrates a one-to-one numerical equivalence regardless of the elasticity measure employed. Replicating prior results, plausible parameter values are applied to the reformulated model to analyze the source-side, distributional effects of a pollution tax and highlight how the Allen and Morishima elasticities differ.     

International trade and technological progress in china: Evidence from time series

Using annual time series data (1983–2007), this paper examines the nexus between international trade and technological progress in China. The time series properties of the data are analyzed by bounds testing approach and vector error-correction model. The empirical results show that, it is not international trade volume and export trade volume but the import trade volume that is cointegrated with total factor productivity. The paper also finds that, in the long run, there is a reciprocal Granger causal relationship between the change of import trade volume and the change of total factor productivity, and in the short run, there is no evidence to support the Granger causality between these changes of the two variables.     

Misallocation and aggregate productivity across time and space

Productivity is at the core of the large differences in income per capita across countries. What accounts for international productivity differences? I discuss cross‐country differences in the allocation of inputs across heterogeneous production units—misallocation—as a potential factor in accounting for aggregate productivity. Policies and institutions generating misallocation are prevalent in poor and developing countries and may also be responsible for differences in the selection of operating producers and technology used, contributing substantially to aggregate productivity differences across countries.     

Looking back, looking ahead: Biased technological change, substitution and the wage gap

The implications of ICT on wage inequality are studied by applying a CES production function with skilled and unskilled labour. Skill-biased technological change increases wage inequality. The result is reinforced in a two-sector general equilibrium model if the income elasticity of the demand for high-tech goods and the elasticity of substitution between final goods are larger than one.