This paper presents an approach to model the spread of new energy technologies in an economy using System Dynamics methodology. Empirical studies on the process of technology diffusion lend evidence to sigmodial diffusion curves e.g. Gompertz's curve or logistic curve. Two major approaches reported in the literature concerning the process of technology diffusion are: ‘epidemic approach' and 'probit approach'. The probit approach is closer to the reality of the economic  world, and has been adopted in the present model. The principle of the model is that the firms are not alike in their expectations of return on investment or risk perceptions. Hence the initial adoption of a new technology is low. But various exogenous and endogenous changes, e.g. price rise of petroleum products, bring increasing number of threshold firms into the category of actual adoptors, which generates the diffusion path for the new technology. The model considers internal rate of return as the basis of such an adoption.

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Date created

• 1991

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• Document

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• Processing documentation available at: https://wiki.albany.edu/display/SCA/Processing+Ingested+Digital+Files

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• Creative Commons BY-NC-ND Attribution-NonCommercial-NoDerivs 4.0 International

  
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System Dynamic Society Records

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• This collection is part of the University Archives