THIS paper reports a study of the diffusion of two catalytic refining techniques, reforming and cracking, among forty-three medium-size petroleum refining firms. The paper has four parts: a brief description of the relevant technology; a development of some hypotheses; a report of research design and findings; a brief. interpretation of these findings. Petroleum is a mixture of compounds with different boiling points and molecular structures. Refining consists in separating the compounds and converting the less valuable compounds to higher valued compounds by changing their boiling points and/or structure. The most important product of petroleum refining is gasoline.1 '[T]he principal mark of gasoline quality has been resistance to knocking, which is expressed as number ' [Hengstebeck, 1959, P. 3]. In I950 the two main ways of converting petroleum compounds were cracking and reforming. Cracking does three things: breaks up large molecules into smaller ones; changes structures of molecules, most importantly increasing octanes of compounds in the gasoline boiling point range; recombines fragments into unwanted low value heavy compounds. Reforming compounds already in the gasoline boiling point range primarily changes their structure to increase octane without changing their weight. Although there is wide variation among petroleums, and the proportions devoted to various uses depends on market conditions, it is possible to make a rough * The theory that underlies the paper was developed jointly with Kenneth D. Mackenzie. Any error in applying the theory is mine. Nancy Bernhardt pointed out a logical error in an early draft and made extensive editorial improvements. Helpful comments were made by Frank Carmone, Irwin Feller, and W. Robert Needham. Many refining company executives generously gave time to fill out a questionnaire. 1 In I947, the nearest census date before the period studied, gasoline accounted for about 45 per cent of the value of petroleum refinery output [Cassady, 1954, p. io]. For plants with cracking facilities the proportion of value accounted for by gasoline tended to be higher-from approximately 60 per cent to over 75 per cent. This is based on statements of operating results for two hypothetical refineries with cracking equipment that appeared in trade journals. The 60 per cent figure assumes that market conditions favored 'limited gasoline and maximum kerosene and fuel oil production' [Read, 1946, p. 248]. The 75 per cent figure assumes that conditions favored the production of gasoline [Anon, 1949, p. 557].