The Dynamics of Competition and of the Diffusion of Innovations

Abstract

The purpose of this paper is to briefly review our understanding of the emergence and diffusion of innovation and to provide a new and more nuanced model of diffusion. The point of departure is to abandon the idea that innovation results only in pure competition, or a zero-sum game, between new and established practices. Given evidence from many cases, the authors believe it more likely that at least at the beginning of races between new and older products, processes and services, growth of one will often stimulate growth of the others. We will term this symbiotic competition. Later the interacting technologies may fall into a cyclic state termed predator-prey competition, and finally a zero-sum game of pure competition may ensue. A main contribution is formulation is a general solution for multi-technology, multi-mode competition. The equations derived can be used to model the interaction of any finite number of technologies where the interaction among any pair can either be pure competition, predator-prey or symbiosis. The model allows determination of the mode and strength of the interactions of competing technologies as they evolve.