Rosenberg’s “learning by using” and technology diffusion

This paper formulates Rosenberg’s [Rosenberg, N., 1982. Inside the Black Box: Technology and Economics. Cambridge University Press, Cambridge] “learning by using” as a stochastic process. The producer of machines learns from the experience of users. Due to this learning, the quality of machines improves over time. It turns out that the process of this improvement takes an approximately exponential form. This improvement process, combined with the growth of demand due to the improvement, can produce an S-shape diffusion curve of machines. Strong demand and advancement of communication technology increase the diffusion speed. The distributional property of the stochastic process and the implications for inequality across machine users are also explored.