This paper focuses on the competition between technologies with increasing and decreasing returns to adoption. We present a dynamic stochastic model to explore the properties of the evolution of technology. These long run outcomes of the evolutionary process, we show, correspond to the stable fixed points of a decision function, and can easily be identified. The evolution of technology under increasing returns to adoption (the probability of adoption rises with the share of the market) could show multiple equilibrium and may drive the adopter market to a single dominant technologies and cause lock—in，with small events early on “selecting”the technology that takes over．However．there is no guarantee that the” fittest”technology(in the long—run sense)will be the one that survives．Under diminishing returns，static analysis is sufficient：the outcome is unique，insensitive to the order in which choices are made．and insensitive to small events that occur during the formation of the market．The reasonable govern ment policy was suggested for the technology—based parts where increasing returns dominate Policies that are appropriate to success in high—tech production and international trade would encourage industries to be aggressive in seeking Out prod uct and process improvements