A systems theoretic framework for analyzing the interplay between technological, technical and economic changes is proposed and discussed without emphasis on the mathematical detail. The approach is to distinguish and explicitly represent technological and technical change and relate such changes in knowledge and performance to changes in economic variables such as utility and market structure. A stochastically driven piece-wise deterministic process is exemplifying the whole dynamic process. Also a cardinal measure of technological change is proposed.
This approach can address several questions in both a neo-classical (e.g. equilibrium, stability, optimality) and an evolutionary spirit. The chapter specifically applies the framework to briefly elaborate the issue of when technological changes are disruptive to market structure.
Published as Chapter 7 in Economics of Technology