Modelling insurgent-incumbent dynamics: Vector autoregressions, multivariate Markov chains, and the nature of technological competition

ABSTRACT

The struggle between sail and steam is a long-standing theme in economic history. But this technological competition story has only partly tackled, since most studies have appreciated the rivalry between the two alternative modes of commercial sea carriage in the late 19th century while the early period has remained relatively under-analysed. This paper models the early dynamics between the two capital goods using a vector autoregression approach (VAR) and a Multivariate Markov Chain approach (MMC). We find evidence that the relationship was non-linear, with a strong indication of complementarities and cross-technology learning effects.

KEYWORDS:

• Economic history
• technological competition
• sailing ships
• steamships
• vector autoregression
• multivariate Markov chains

JEL CLASSIFICATION:

• N13
• N73
• O33
• C14
• C32

Acknowledgments

This work benefited from support by the Portuguese Science and Technology Foundation through the Grant UID/GES/00315/2013. The funding source played no role in the design, analysis, interpretation, or writing of the article, or in the decision to submit it to publication.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Fundação para a Ciência e a Tecnologia [Grant UID/GES/00315/2013].