The creation of an innovation niche depends on the interaction of three mechanisms involving: converging expectations, adequate level of individual and network power and efficient knowledge creation and diffusion. Such mechanisms define the key characteristics of a network of firms (i.e. the innovation niche), and the interaction among them guides the creation and development of a new technology.

This paper proposes an agent-based model to investigate the dynamics characterizing such interactions and the role that policy intervention can have in governing the niche development process. Specifically, the authors consider and assess the impact of two policy actions: (1) increasing actors’ expectations towards the new technology by means of information spreading, and (2) providing subsidies aimed at stimulating technological switch.

Preliminary results confirm the importance of policy intervention and show the complementarity of the two policy measures considered. Hence, a mixed policy action could serve the purpose of a rapid and stable creation of an innovation-niche.

Download the article (external PDF link to journal)