The diffusion of infrastructure dependent technologies

Abstract

In order to realize the transition to a more sustainable society, changes in societal subsystems such as energy and transport are necessary. Technological substitution and the diffusion of environmentally friendly technologies are envisioned to play an important role in these changes. New sustainable technologies compete with each other and with existing technologies to become the dominant design of the future. Another barrier hampering the diffusion of these technologies is that innovations in energy and transport often require changes in infrastructures. We study this transition problem from the perspective of competing technologies (Arthur 1988), but the fact that these technologies are part of a large technical systems (LTSs) makes the competition dynamics even more complicated. This paper focuses on the interdependency between the physical components of LTS: the technical and the infrastructural components. Literature on technological substitution and succession emphasizes the importance of network externalities and heterogeneity of agents in this process (Shy 1996, Windrum and Birchenhall 2005, Dalle1997, Adner 2003, Malerba et al. 2007). Network externalities explain for a large extent the lock-in of existing technologies which hinder the diffusion of new and sometimes superior technologies. We can learn from these models that even in presence of networks externalities, modeled as the number of users of a technology, heterogeneity of agents might lead to technological substitution of consumer goods. However, different models are needed as infrastructure development becomes crucial for diffusion, because network externalities and other determinants of infrastructure make the process to overcome the lock-in of existing systems even more complicated. Determinants of consumer and infrastructure builder decisions can be found in the size and lumpiness of the investments needed for infrastructure development, the technological interrelatedness of the technological and infrastructural components, the spatial dimensions of infrastructure development, the competition with other (existing or new) infrastructure-technology combinations, and the fact that different types of actors select and adopt the different components of the technological system. Furthermore, the alternatives to the existing systems each have their own infrastructural requirements.