Modeling Technological Deployment and Renewal: Monotonic vs. Oscillating Industrial Dynamics

TL;DR

This paper introduces a new model for industrial technology deployment and renewal, revealing how different deployment speeds can cause either oscillating or monotonic production patterns, with implications for long-term planning.

Contribution

It extends the classic S-curve model to include equipment renewal based on lifespan distribution, demonstrating endogenous business cycles from industrial dynamics.

Findings

Fast deployment causes production oscillations.

Slow deployment leads to monotonic growth.

Model validated with nuclear power and smartphone case studies.

Abstract

This study proposes a new model based on a classic S-curve that describes deployment and stabilization at maximum capacity. In addition, the model extends to the post-growth plateau, where technological capacity is renewed according to the distribution of equipment lifespans. We obtain two qualitatively different results. In the case of "fast" deployment, characterized by a short deployment time in relation to the average equipment lifetime, production is subject to significant oscillations. In the case of "slow" deployment, production increases monotonically until it reaches a renewal plateau. These results are counterintuitively validated by two case studies: nuclear power plants as a fast deployment and smartphones as a slow deployment. These results are important for long-term industrial planning, as they enable us to anticipate future business cycles. Our study demonstrates that business cycles can originate endogenously from industrial dynamics of installation and renewal, contrasting with traditional views attributing fluctuations to exogenous macroeconomic factors. These endogenous cycles interact with broader trends, potentially being modulated, amplified, or attenuated by macroeconomic conditions. This dynamic of deployment and renewal is relevant for long-life infrastructure technologies, such as those supporting the renewable energy sector and has major policy implications for industry players.