Survival of technologies: an evolutionary game approach

Abstract

This paper models technology adoption as an evolutionary and asymmetric game based on a pairwise contest involving two populations, firms and consumers. First, externalities are considered only on the supply side, leading to the usual results found in the recent economic literature on the subject: path dependence, lock-in, and the possibility ofselecting inferior technology. Next externalities are introduced on the demand side, which in Leibenstein's classic paper leads to bandwagon and snob effects, and interactions between supply and demand are examined.

Keywords

• evolutionary competition
• bounded rationality
• bandwagon effect
• snob effect
• path dependence