Innovation waves, self-organized criticality and technological convergence

The purpose of this paper is to investigate the evolutionary process of imitation and innovation as a process of searching in a given neighbourhood of firms. The spreading of information through neighbourhoods allows firms to acquire knowledge leading to innovation waves followed by imitation as firms attempt to glean information on best practise techniques. Whilst innovators are temporarily allowed to reap quasi rents, the imitative band wagon effect drives the profit rate down to its normal level. Productivity growth lowers the prices of sectors involved in the process of technological advance, causing obsolescence and creative destruction in a Schumpeterian sense.