The system dynamics of collective knowledge: From gradualism and saltationism to punctuated change

The economics of localized technological change provides an original framework to model the dynamics of technological innovation as the result of the interaction between the inducement to change the technology, generated by the mismatch between plans and expectations, and the characteristics of the system. The interplay between networking costs and knowledge supermodularity can explain both punctuated and gradual change. Small variations in the parameters can generate either gradual or discontinuous changes. Punctuated technological change is likely to take place when the interplay between positive and negative knowledge externalities leads to the creation of commons of collective knowledge and hence new technological systems.