Adaptive Dynamics and Technological Change

Dercole, F., Dieckmann, U. ORCID: https://orcid.org/0000-0001-7089-0393, Obersteiner, M. ORCID: https://orcid.org/0000-0001-6981-2769, & Rinaldi, S. (2006). Adaptive Dynamics and Technological Change. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-06-070

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Abstract

This paper is about the emergence of technological variety arising from market interaction and technological innovation. Existing products in the market compete with innovative ones resulting in a slow and continuous evolution of the underlying technological characteristics of successful products. When technological evolution reaches an equilibrium, it can either be an ESS (Evolutionary Stable Strategy), where marginally innovative products do not penetrate the market, or a branching point, where new products coexist along with established ones. Thus, technological branching can give rise to product variety. In the paper we first introduce Adaptive Dynamics (AD), a recently proposed theory of evolutionary processes, aiming at modelling various features of technological change. Then, a first application of AD in economics is presented and discussed in detail. The limitations of the AD approach, as well as some promising further applications in economics and social sciences, are briefly discussed at the concluding section.

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