Formal Modeling of Innovative Competition in a Production System — an Evolutionary Approach (original) (raw)
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Price versus quality competition: in search for Schumpeterian evolution mechanisms
Journal of Evolutionary Economics, 2016
The paper extends the research program of modeling the Schumpeterian vision of innovative development in the Arrow-Debreu theory of general equilibrium. The core of this setup is based on modeling the two fundamental forms of economic life distinguished by Schumpeter, namely the circular flow and economic development by specific extensions of the production system being part of the Debreu private ownership economy, so that the analysis includes static as well as dynamic forms. In this context the paper aims at studying the mechanisms of Schumpeterian evolution in the conceptual apparatus of the Hurwicz's theory of economic mechanisms. To this purpose two kinds of mechanisms of Schumpeterian innovative evolution are studied. First, price mechanisms which include prices as an element of the message space, and second, qualitative mechanisms which, in addition, guarantee that the position of a group of agents will get better off with respect to the given criterion.
Schumpeterian perspectives on innovation, competition and growth
Journal of Evolutionary Economics, 2008
We develop a new methodology for evolutionary economic modelling, based upon the 'micro-meso-macro' analytical framework for dealing with behaviour in complex economic systems. This new methodology involves a combination of computational, historical and econometric methods. It is argued that this integrated methodology is superior to the theoretically restricted simulation/calibration methodology found in new classical macroeconomics and to the relatively unrestricted methodology found in much of agent-based modelling in evolutionary economics. It is also viewed as much more useful than the conventional 'vector error correction' econometric methodology when the evolutionary economic modeller is faced with nonlinear time paths and associations between observed variables.
Adjustment Processes Within Economic Evolution — Schumpeterian Approach
Journal of the Knowledge Economy
This research is inspired by Schumpeter's theory of economic development and aims at analysing the outcomes of innovative and non-innovative changes implemented within economic evolution. A multiplicity of outcomes of economic processes leads to complexity of the structure of economic evolution. In order to examine innovative processes, the role of the circular flow, i.e. a form of the economy, which for Schumpeter was both the starting and ending points in the analysis of economic development, should be taken into account. In this context, we determine a simple model of economic evolution in line with Schumpeter's theory, using Hurwicz's concept of the adjustment process. This allows us to examine an impact of accessed information on diversification of economic processes. It should be added that in the model presented, non-innovative changes also play important roles, which is coherent with Schumpeter's theory. As a result, we prove, under some initial conditions coming from the mainstream of the Schumpeter's thought, that the economy under study can evolve in the direction of equilibrium and take a form of circular flow.
The Change in post 1980 Economic Development and Innovation Studies towards Evolutionary Economics
Journal of Economics Studies and Research, 2013
The role of innovation in economic growth is perceived differently by the different schools of thought. The neoclassical theories emphasise equilibrium in the economy and cannot explain the role of innovation, because the effect of innovation is actually a disturbance of equilibrium. Schumpeter (1961) has shown that growth and development can only take place if the economy is constantly disturbed to an out-of-equilibrium phase. In some of the later neoclassical theories, innovation was considered as a factor that causes growth, but was treated as an exogenous factor. The "new growth theories" were developed later, including innovation as an endogenous factor, but these theories were still based on the equilibrium principle. In the Schumpeterian and neo-Schumpeterian theories, innovation is treated as endogenous to the economy. Schumpeter had not been acknowledged as a mainstream economist during the time that he developed and first published his theory. It was not until the 1980s that economists started paying attention to his works and to the importance of innovation in development. The aim of this article is to determine how the studies since 1980 have changed regarding their foundation in the different schools of thought. A methodological and theoretical review is conducted of post 1980 empirical studies that determined the relationship between innovation and economic development. It was found that many empirical studies still make use of neoclassical equilibrium models and that the studies that consider the complexity of the innovation system are not yet sufficiently developed to explain the relationship between innovation and economic development.
Schumpeter's theory of economic development: an evolutionary perspective
Although area of economics associated with economic evolution has become established during the last couple of decades, its objectives and potentials can most easily be un-derstood on the background of the work of Joseph A. Schumpeter. The fundamental objective of evolutionary economics is to understand the dynamic processes that dually impact the behavior of companies and the market environment in which they operate. The main purpose of this paper is to present the economic development theory of J. A. Schumpeter in the frame of evolution theory. Although Schumpeter had evidently a dis-tinct understanding of the general character of an evolutionary theory he did not suc-ceed in creating a satisfactory, general theory of economic evolution
This paper is aimed to be a contribution for the current debate on the future trends of neocshumpeterian evolutionary theory of innovation, and specially, on the role that complexity approach can play in articulating different streams inside evolutionary theory. The thesis of this paper it that these different streams adhere to different but overlapping ontological assumptions, since they aim to address different but complementary aspects of a same reality. In this sense, they can be articulated by an integrating ontolgy. In this paper we propose that complexity ontology can play that role. Be awared on this will allow neoshumpeterian evolutionary theory of innovation to find better way on intagrating, to identify vacancy areas for future research, and to present itself as an articulated research programme, with theoretical foundations and coherent methodological tools. Resumen El presente artículo intenta ser un aporte al debate actual sobre el rumbo que está tomando la teoría evolucionista neoshumpeteriana de la innovación, y en particular, acerca del rol que juega el enfoque de la complejidad para articular e integrar las distintas corrientes a su interior. La tesis de este artículo es que diferentes corrientes al interior del evolucionismo adhieren a distintos conjuntos de supuestos ontológicos ya que abordan aspectos diferentes pero complementarios de una misma realidad. En este sentido podrían ser articulados si se considerara una ontología integradora. En este artículo proponemos que la ontología de la complejidad podría cumplir esa función. Tomar conciencia de esto, le permitiría a la disciplina encontrar mejores formas de articulación a su interior, identificar claramente las áreas de vacancia y presentarse hacia afuera como un programa de investigación fuertemente articulado, con fundamentos teóricos y herramental metodológico acorde.
Innovation, competition, and growth: Schumpeterian ideas within a Hicksian framework
Springer eBooks, 2009
Schumpeter's ideas, which should be the basis of any evolutionary approach to the relations between innovation, competition and growth, are revisited and interpreted within the analytical framework proposed by Hicks in Capital and Time. Two main results emerge. First, the introduction of any new technology may lead to higher unemployment and reduced productivity; only an active monetary (and banking policy) will allow the economy to capture productivity gains. Second, within an industry confronted by recurrent technological changes, certain monopoly practices may be needed for this industry to converge towards an efficient market structure determined by the content of technology and the profile of demand. These results suggest some reconsideration of the macroeconomic and industrial or competition policies designed, in Europe, to cope with both technical change and globalization in modern economies.
Comparative Analysis of Mechanisms of Schumpeterian Evolution
Journal of Entrepreneurship, Management and Innovation, 2018
The paper extends the research program of modeling the Schumpeterian vision of innovative development in the framework of the Arrow-Debreu theory of general equilibrium. To study changes in the production sector, as well as in the whole economy, the concept of extension of the systems under study is introduced. It enables us to model the mechanisms of Schumpeterian evolution in the conceptual apparatus of Hurwicz's theory of economic mechanisms. The paper is aimed at expanding our previous studies into two new directions. First, we establish the conditions sufficient for improving positions of various groups of agents such as producers, innovators, consumers, etc., under the price or qualitative mechanism regime. Second, to compare mechanisms of Schumpeterian evolution, we respect the logic of this process which is determined by innovative, as well as adaptive, equilibrium changes in the evolving economy under consideration. Consequently, we formulate two different criteria in our comparative analysis based, on the one hand, on the index of the distance between two innovative extensions of the given economic system and, on the other hand, on the increase in wealth of the given set of agents. The motivations of innovators, and the reason for which innovations are adopted into the producers' and consumers' plans of action, are also precisely explained in the paper. The results of our theoretical research can be useful in economic analyses, among others, in the case of the lack of the sufficient access to statistical data. Due to both the formal conceptual apparatus of the general equilibrium theory and Hurwicz's approach to the problem of designing economic mechanisms, the paper takes the form of an axiomatic deductive system of mathematical theorems interpreted in the language of economics.