A review of innovation and diffusion theories: Implications for the potential adoption of clean coal technologies

This report present a historical review of the innovation and diffusion theories and models that are discussed in the economics literature. Many of the studies cited here focus on optimal'' levels of research and development (R D) spending, timing of innovations, etc. The focus of this review, however, is to determine applicable innovation and diffusion patterns and identify relevant experiences in other industries to help researchers in the clean coal technology (CCT) program better understand how new technologies are developed and adopted. The process of technical change includes the discovery, development, and adoption of technological changes production processes. For analytical purposes, this review divides the process into four steps: R D, invention, innovation, and diffusion. It then identifies four principal economic determinants of technical change: a firm's size, industry concentration or market power profitability, and behavior. This review contrasts the major elements in demand-pull and supply-push innovation theories and examines alternative functional forms of diffusion models. It also discusses results of selected case studies that are potential analogs for projecting how quickly CCTs will be adopted by utilities and industry. Potential barriers to adoption are identified, and recommendations for the CCT program are made. 78 refs., 7 figs.