An age structured demographic theory of technological change

TL;DR

This paper develops a demographic-based theoretical framework for modeling technology transitions, enabling parameter estimation of diffusion curves without relying on historical data, thus improving predictive capabilities for nascent innovations.

Contribution

It introduces a novel application of demography theory to derive parameters for S-shaped diffusion curves in technology transition models, integrating industrial dynamics and agent diversity.

Findings

Derivation of Lotka-Volterra competition system from first principles.

Timescales explained through technology lifetimes and industrial dynamics.

Framework aligns with multi-level perspective and discrete choice theory.

Abstract

At the heart of technology transitions lie complex processes of social and industrial dynamics. The quantitative study of sustainability transitions requires modelling work, which necessitates a theory of technology substitution. Many, if not most, contemporary modelling approaches for future technology pathways overlook most aspects of transitions theory, for instance dimensions of heterogenous investor choices, dynamic rates of diffusion and the profile of transitions. A significant body of literature however exists that demonstrates how transitions follow S-shaped diffusion curves or Lotka-Volterra systems of equations. This framework is used ex-post since timescales can only be reliably obtained in cases where the transitions have already occurred, precluding its use for studying cases of interest where nascent innovations in protective niches await favourable conditions for their diffusion. In principle, scaling parameters of transitions can, however, be derived from knowledge of industrial dynamics, technology turnover rates and technology characteristics. In this context, this paper presents a theory framework for evaluating the parameterisation of S-shaped diffusion curves for use in simulation models of technology transitions without the involvement of historical data fitting, making use of standard demography theory applied to technology at the unit level. The classic Lotka-Volterra competition system emerges from first principles from demography theory, its timescales explained in terms of technology lifetimes and industrial dynamics. The theory is placed in the context of the multi-level perspective on technology transitions, where innovation and the diffusion of new socio-technical regimes take a prominent place, as well as discrete choice theory, the primary theoretical framework for introducing agent diversity.