1036 THE ECONOMIC JOURNAL IDECEMBER well as some features implicit in Mansfield-type models, such as imperfect nformation and as ymmetric technological knowledge.d IIL A SELF-ORGANISATION MODEL OF THE DIFFUSION OF INNOVATIONS AND THE TRANSITION BETWEEN TECHNOLOGICAL JECTORIES In two previous papers, one of the present authors(Silverberg, I984; I987 attempted to demonstrate the relevance to economic theory of the self- organisatio proach to dynamic modelling pioneered by Eigen, Haken Prigogine and others. In essence the argument proceeds from the observation that in complex interdependent dynamical systems unfolding in historical, i c irreversible time, economic agents, who have to make decisions today the correctness of which will only be revealed considerably later, are confronted with irreducible uncertainty and holistic interactions between each other and with aggregate variables. The a priori assumption of an'equilibrium'solutic to this problem to which all agents ex ante can subscribe and which makes their actions consistent and in some sense dynamically stable is a leap of methodological faith. Instead we proposed employing some of the recently developed methods of evolutionary modelling to show how the interaction of diverse capabilities, expectations and strategies with the thereby emerging selective pressures can drive a capitalistic economy certain definite patterns of development Drawing on a dynamic model of market competition with embodied technical progress investigated in Silverberg(I987), we embed the question of diffusion into the larger one of the transition of an industry between two technological trajectories. Choice of technique is no longer a choice between two pieces of equipment with given(but perhaps imperfectly known characteristics, but now involves skills in using them which can be endogenously built up by learning by doing or by profiting from the experience of others, as well as expectations about future developments along the various competing trajectories. As we shall see, the diversity in firms'capabilities and expectations is an irreducible element driving the diffusion process In the sectoral approach taken here industry-level demand is taken as given and growing some exponential rate. Firms command some market share of his demand at any given time, but market shares may change over time as a dynamic response with a characteristic, time constant(reflecting the'freeness of competition and such factors as brand loyalty, information processing and search delays and costs, etc. )to disparities in the relative competitiveness of firm This concept, so dear to close observers of the business scene, has to our knowledge evaded incorporation into a systematic economic theory until now 4 A more detailed discussion of the empirical basis of the hypotheses entering into the model presented below can be found in Dosi et al.(I tional modelling Haken(1983), Nicolis and Prigogine(1977) and Prigogine(1976)