A percolation model of innovation in complex technology spaces

To address these empirical observations, we introduce a complex technology space based on percolation theory. This space is searched randomly in local neighborhoods of the current best-practice frontier. Numerical simulations demonstrate that with increasing radius of search, the probability of becoming deadlocked declines and the mean rate of innovation increases until a plateau is reached. However, for 'richer' technological environments, a 'trough' separates myopic from long-range search due to the effect of R&D duplication. The distribution of innovation sizes is highly skewed and may resemble a Pareto distribution near the critical percolation probability.