Skill Transferability and the Stability of Transition Pathways - A Learning-Based Explanation for Patterns of Diffusion

Abstract

Technological know-how is necessary to make effectively use of new machinery and capital goods. Firms and employees accumulate technology-specific knowledge when working with specific machinery. Radical innovation differs by technology type and pre-existing knowledge may be imperfectly transferable across types. In this paper, I address the implications of cross-technology transferability of skills for firm-level technology adoption and its consequences for the direction of macroeconomic technological change. I propose a microeconomically founded model of technological learning that is based on emperical and theoretical insights of the innovation literature. In a simulation study using the macroeconomic ABM Eurace@unibi-eco and applied to the context of green technology diffusion, it is shown that a high transferability of knowledge has ambiguous effects. It accelerates the diffusion process initially, but comes of the cost of technological stability and specialization in the long run. For fims, it is easy to adopt, but also easy to switch back to the conventional technology type. It is shown how different types of policies can be used to stabilize a technological transition pathway. The findings are summarized in a gereral texonomic framework to characterize technologies. It represents a bottom-up approach to the study of technology transitions.