Technological diffusion and cyclical growth

The models of technology diffusion originally proposed by Metcalfe (1981), Batten (1987) and Amable (1992) are modified so as to allows for price expectations of adopters and suppliers of an innovation. We show many interesting and somewhat unexpected results, which were not noticed in the preceding models: i) productive technologies with higher returns or small fixed costs, ii) large market dimension (e.g. as a consequence of economic growth), iii) high speed of adoption, and iv) "cautious" investors in production of innovation, tend to prevent a balanced development of an innovation. Moreover 1) a co-existence of multiple equilibria, depending on initial conditions of new technology diffusion, 2) cyclical evolution of the new technique as a rule rather than an exception, are shown. Finally, some implications for policy interventions as well as firmsu marketing policies emerge.