Macrodynamics of Technological Change: Market Penetration by New Technologies

Progress in technology is viewed as a continuing historical process during which existing forms of satisfaction of human needs are replaced by new and superior ones. A mathematical model is developed describing this process for any number of competing technologies satisfying the same need. The state of competition is characterized by market shares held by particular technologies and the model gives the evolution law for this state. The approach adopted in the derivation of the model is based on long-term balance of capital flows governing production using different technologies. Both deterministic and stochastic versions of the nonlinear dynamic model are presented. Computer subroutines are given for estimation of model parameters from historical data and for forecasting future development of the process. The model is applied to the substitution of primary energy sources in world energy consumption, including the forecast of market penetration by nuclear energy.