PrefaceThis new research project a t IIASA is concerned with modeling technological and organisational change; the broader economic developments that are associated with technological change, both as cause and effect; the processes by which economic agents -first of all, business firms -acquire and develop the capabilities t o generate, imitate and adopt technological and organisational innovations; and the aggregate dynamics -a t the levels of single industries and whole economiesengendered by the interactions among agents which are heterogeneous in their innovative abilities, behavioural rules and expectations. The central purpose is t o develop stronger theory and better modeling techniques. However, the basic philosophy is that such theoretical and modeling work is most fruitful when attention is paid t o the known empirical details of the phenomena the work aims t o address: therefore, a considerable effort is put into a better understanding of the 'stylized facts7 concerning corporate organisation routines and strategy; industrial evolution and the 'demography7 of firms; patterns of macroeconomic growth and trade.From a modeling perspective, over the last decade considerable progress has been made on various techniques of dynamic modeling. Some of this work has employed ordinary differential and difference equations, and some of it stochastic equations. A number of efforts have taken advantage of the growing power of simulation techniques. Others have employed more traditional mathematics. As a result of this theoretical work, the toolkit for modeling technological and economic dynamics is significantly richer than it was a decade ago.During the same period, there have been major advances in the empirical understanding. There are now many more detailed technological histories available. Much more is known about the similarities and differencers of technical advance in different fields and industries and there is some understanding of the key variables that lie behind those differences. A number of studies have provided rich information about how industry structure co-evolves with technology. In addition t o empirical work a t the technology or sector level, the last decade has also seen a great deal of empirical research on productivity growth and measured technical advance a t the level of whole economies. A considerable body of empirical research now exists on the facts that seem associated with different rates of productivity growth across the range of nations, with the dynamics of convergence and divergence in the levels and rates of growth of income in different countries, with the diverse national institutional arrangements in which technological change is embedded.As a result of this recent empirical work, the questions that successful theory and useful modeling techniques ought t o address now are much more clearly defined. The theoretical work described above often has been undertaken in appreciation of certain stylized facts that needed t o be explained. The list of these 'facts7 is indeed very l...

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The paper analyses some general dynamic properties of industries characterized by heterogeneous firms and continuing stochastic entry. After a brief critical assessment of some significant drawbacks of recent contributions to modeling of stochastic industrial dynamics, we propose a novel analytical apparatus able to derive some generic properties of the underlying competition process combining persistent technological heterogeneity, differential growth of individual firms and turnover. The basic model, we suggest, is indeed applicable with proper modifications to a large class of evolutionary processes, well beyond industrial dynamics. Copyright Springer-Verlag Berlin/Heidelberg 2003Evolution, Competition, Stochastic entry, Industrial dynamics, Evolutionary games,

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