# System dynamics and technological innovation System - Models of multi-technology substitution processes

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In order to switch to renewable energy technologies, major technological transformation processes have to take place in different industrial sectors. Such transformations have been referred as technological transitions. Theoretical frameworks have been developed that describe elements of technological transitions such as the emergence and growth of new technologies, physical and social constraints and the competition and co-evolution of different technological options. Such frameworks may be used to inform governments, firms and other actors of how to understand and influence change processes. However, to this point no attempt has been made to develop a formal modeling tool based on these qualitative frameworks of technical change. In a formal model some generic patterns can be reproduced and visualized. Secondly, having a model, the effect of different inputs can be tested, such as different policy regimes and management strategies. Thirdly, playing with a model, patterns of change can be discovered that can be fed back into the design of more empirical and quantitative studies. Finally, the strictness of a formal model could sharpen the concepts used to describe real world processes. This thesis presents two formal models of technological diffusion and substitution. Several researchers have used the Lotka-Volterra equations to model competition among technologies. Lotka-Volterra models assume that while a technology grows, it diffuses into a larger market in which it might compete with other technologies and different variables included in the equations represent this feature. Lotka-Volterra equations show that there are different modes of interaction between technologies: symbiosis, predatory prey, and pure competition. The model presented in this study demonstrates the failure of an emerging technology in pure competition with a mature and wellestablished technology, but also how a third technology called “bridging technology” could change the dynamics in favor of the emerging one. Compared to the Lotka-Volterra model, the second and more detailed model of technology diffusion presented in this study provides us with a better understanding of the dynamics and feedback mechanisms governing the technology diffusion process. Different mechanisms such as technological learning, price reduction, increment in firm’s income enhancing the technology’s performance, and increment in technology’s attractiveness among users, have been added to the model of diffusion. The diffusion model is used to show how on one hand the strategies and decisions made by the producer of the technology influence attitudes of the potential adopters by altering the technology attractiveness. On the other hand, attitudes of the potential adopters influence the adoption rate and consequently the firm’s profitability and further decisions.

Publikationen registrerades 2008-10-02. Den ändrades senast 2016-09-27

CPL ID: 74728

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