Innovation niche stability with a short-term policy intervention

Abstract

This article presents an agent-based (AB) model designed to investigate the emergence of innovation niches. The novel contribution of this paper is to assess whether the introduction of institutional agents of change (referred to as spreaders), whose sole activity is to persuade firms to switch from the dominant technology (i.e. the regime technology) to a new technology, can prompt the emergence of a stable and self-sustained innovation niche. The following two results were obtained: (1) as the number of spreaders in the system increases, the latency time required for the niche to take off reduces steadily; (2) policy withdrawal can take place and this does not compromise the pathway towards full niche development, although it considerably slows it down. However, policy withdrawal can only be carried out with conditions that a critical mass of users is reached. Interestingly, as the number of spreaders increases, the critical mass threshold increases as well, but the time required for reaching the threshold decreases. This result stresses the importance of social resources in the niche development process as well as the importance of a dense network of supporters