Penetration Mechanism of New Technologies: Integration Formulation from the Company Level to the Macroeconomic Level

Tani, A. (1988). Penetration Mechanism of New Technologies: Integration Formulation from the Company Level to the Macroeconomic Level. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-88-042

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Abstract

A new approach to formulate the penetration mechanism of advanced technological equipment into industry is proposed in this paper. This approach aims at the integration of the company level (micro-level) and the industry level (macro-level) into the penetration mechanism.

Our model is formulated on the basis of several empirical laws observed in the real world. As a result, the following factors are introduced into the model: (a) Cost/benefit judgement at the company level; (b) Economy of scale in user costs; (c) Wage rate gap between large and small companies; (d) Company size distribution; (e) Decreasing price of advanced technological equipment; (f) Increase of the wage rate.

Although we introduce many parameters related to the above factors, we can derive the final mathematical form of our model as a kind of Gompertz curves.

New sophisticated implications can be added to the parameters of the Gompertz curves through our model.

This model focuses on the benefits of labor-saving. However, the formulation itself is also applicable to other kinds of benefits, if the benefits can be expressed as a function of company size.

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