INTERPAKS, Berkeley, CA: Giannini Foundation of Agricultural Economics, University of California, 1980. (working paper no. 159.) 18 p., Empirical works found that the rate of diffusion of new technology is an S-shaped function of time. The prevailing theoretical explanation of these observations treats diffusion of a continuous process of imitation or communication among adopters. Introduces an alternative model for the adoption of new processes by industry based on microeconomic theory. Demonstrates that S-shaped diffusion curves can be explained by profit maximation, increasing returns to scale of the new technology, the dynamics of input prices, and the size distribution of forms within an industry. The analysis can be applied to the diffusion of new technology among agricultural firms.