Explanations of technological diffusion focus on information being spread by epidemic processes, on profit heterogeneity, or oligopolistic competition. The model in this paper integrates the epidemic and the heterogeneity-based approaches. Predictions are tested on Norwegian data concerning the diffusion of laboratory equipment in primary health care. The empirical analysis shows that both diffusion of information, and profitability considerations, are significant factors in explaining technological diffusion. The integrated model performs significantly better than any submodel. Our analysis also gives indications of the impact of public reimbursement policies on physician behavior.