IN his seminal work, Schmookler [I5] investigated the role of economic factors in the determination of the rate of technological change. The latter he approximated by patenting activity. The validity of this approximation has merited considerable discussion (see for example Scherer [I4]), but for present purposes we will take the objections as read. Schmookler's major result is that, 'capital goods invention tends to be distributed among industries in proportion to the prevailing distribution of investment. The central reason for this evidently is that inventing is heavily influenced by considerations of profitability.' This represented a considerable advance in that it supported empirically an hypothesis that technological change was endogenous to the economic system. The purpose of the present paper is to investigate the validity of Schmookler's results in the UK case. In particular we wish to stress the effects of cost differences on the level of patenting activity. If costs of invention are an important determinant of patenting activity, then this immediately implies that technological opportunity is important in determining the rate of technological advance, and such a finding is in contrast to those of Schmookler (see Rosenberg [I2]) although consistent with theoretical suppositions (Nordhaus [I I]). Although considerable effort has gone into the investigation of the relationship between patenting activity and market structure and between technological advance and technological opportunity (see Scherer [IND), the main argument of Schmookler that demand pull factors are of prime importance in the inter-industry distribution of invention seems to have merited little further empirical investigation. If one restricts one's view to the UK case this statement is even more relevant.1 In section II we develop a model for the explanation of patenting activity,