Simulation Models of Technological Innovation

The use of simulation modelling techniques in studies of technological innovation dates back to Nelson and Winter's 1982 book, An Evolutionary Theory of Economic Change. Four main issues are identified in reviewing the key contributions in this burgeoning literature. First, a key driver in the construction of computer simulations has been the desire to develop theoretical models capable of dealing with the complex phenomena characteristic of technological innovation. Second, no single model captures all of the dimensions and stylized facts of innovative learning. The article develops a taxonomy that distinguishes between these dimensions and clarifies the different perspectives underpinning the contributions made by mainstream economists and nonmainstream, neo-Schumpeterian economists. Third, the simulation models are heavily influenced by the research questions of these different schools of thought. Finally, attention is drawn to the difference between learning and adaptation within a static environment and within a dynamic environment in which the introduction of new artifacts and patterns of behavior changes the selective pressure faced by agents.

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