Modelling the diffusion of innovations. Part 1.

This paper discusses some methodological issues in seeking explanations on the process of technology diffusion. After an innovation has been introduced we assume that there are firms carrying the innovation and others that imitate with the total number of firms forming the market population. The basic presupposition of our model is that there is an intrinsic relation between diffusion patterns and market dynamics. On this basis it is assumed that a "representative" firm in a given market population (of firms) is faced with the discrete choice of entry or non-entry into the market, whereby the choice probabilities depend on crucial economic parameters and variables. Our approach is in the spirit of the Griliches-Mansfield type of diffusion modelling; however, the focus is on a broader industry coverage and a stronger focus on high technology areas. (INT)