A Model of the Imitation Process

Abstract

A simple model is developed to help explain differences among process innovations in the rate of imitation. The major hypothesis around which the model is built is the following: The probability that a firm will adopt a new technique is an increasing function of the proportion of firms already using it and the profitability of adopting it. The probability of adoption is also hypothesized to be a decreasing function of the size of the investment required. The model is tested with twelve innovations from three industries. Interindustry differences show up. An equation of the form predicted by the model can explain most of the variation among the rates of imitation.