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The contemporary theorizing on the diffusion of technology in terms of innovation-imitation distinction is the point of departure of this paper. The alternative viewpoint that the diffusion of technology is intimately linked with its development is advanced. The process of diffusion is best conceived in terms of the actual substitution of a new technique for the old. This viewpoint is further developed and operationalized in the form of two testable models of technological substitution. Several alternative derivations of these models are presented. The models have been applied to ten cases of adoption of new techniques in electricity generation, farming, manufacturing, steel production, and textile industries. There generally tends to be significant interindustry differences in the rates of diffusion of technology. Further, substitution of a new technique for the old generally takes place in the form of a significantly disproportionate growth in the use of the former as compared to the latter.