Industry dynamics with product innovation: An evolutionary model (original) (raw)
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Relationships between innovations and competition are the main bases of an evolutionary approach to economic development. Innovation is recognized as a major force to achieve success in an intensively competitive environment, and competition is an essential element of the coordination mechanism required for economic changes to be successfully brought about. One of the first who well explore these relationships was Schumpeter. The idea that innovative competition may improve the positions of some groups of economic agents involved in the evolutionary processes is rooted within the neo-Schumpeterian research program. It suggests that the price mechanism typical for the routine behavior of agents should be replaced by a qualitative one to take into account the structural changes of an economy based on innovative and competitive processes as drivers of economic evolution. In this context, the main aim of this paper is to give a new setting of the phenomenon of innovative competition. Th...
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.
What drives innovation? Evidence from economic history
A B S T R A C T An unresolved issue in innovation studies is to what extent and how innovation is affected by changes in the economic environment of firms. This study elaborates on a theoretical framework that unites theories of innovation as creative response and the economics of complexity. In the empirical section, results from a new micro-based database on Swedish product innovations, 1970–2007, are introduced. Applying the theoretical framework, both quantitative evidence and collected innovation biographies inform of the historical impulses that have shaped innovation activity in the Swedish economy in two broad surges during the 1970s and 1990s. The study shows that, rather than being the result of continuous efforts, most innovations were developed as a response to discrete events, history-specific problems and new technological opportunities. It is also suggested that patterns of creative response are industry-specific and associated with the radicalness and complexity of innovation processes.
Evolutionary Model of an Innovative and Differentiated Industry
IFIP Advances in Information and Communication Technology, 2010
In this paper, we propose an agent based model that describes the spatial and temporal evolution of an industry composed of a set of heterogeneous firms distributed in different regions. The model formalizes a particular hypothesis about spatial agglomeration and industrial concentration phenomena in which innovation occupies the central place of economic and geographical growth explanation. Each company owns one or more manufacturing divisions that produce an exclusive variety of product. Economic selection is modeled as a monopolistic competition market where competitive pressure depends on consumers' preference for variety. Moreover, firms may enjoy more competitive advantages innovating in processes, product characteristics and new commodities. The purpose of the model is integrating theories which come from research areas traditionally separated into a single formal proposal.
Industry dynamics in complex product spaces: An evolutionary model
Structural Change and Economic Dynamics, 2010
In this paper we present an evolutionary simulation model of industry dynamics with product innovation and differentiated demand in complex product industries, i.e. industries where products are made of many components, possibly belonging to different technologies, and providing a variety of services to consumers who have heterogeneous preferences. We analyze how the complexity of the product space, the strategies that firms follow to search this space either innovating or imitating, and the differentiation of consumers' preference interact to determine the structure and evolutions of the industry.
Costly innovators versus cheap imitators: a discrete choice model
Circ Res, 2010
Two alternative ways to an innovative product or process are R&D investment or imitation of others' innovation. In this article we propose a discrete choice model with costly innovators and free imitators and study the endogenous dynamics of price and demand in a market with many firms producing a homogeneous good. The basic idea is that imitation works better the more innovators are around, with a trade off between the advantages of the two strategies. First we look at innovation as costs reduction in a perfectly competitive market. Here we also study the stabilizing or destabilizing effect of memory and asynchronous updating of strategies. Then we introduce endogenous technological progress and analyze the determinants of the speed of price reduction as well as the occurrence of an initial oscillatory phase that precedes convergence. An extension of the model introduces product differentiation addressing the effects of innovation on demand. While the basic version of the model have stable equilibrium or cyclical behaviour, there are conditions for chaotic behaviour of price and agents' choices. This is the case of long memory and asynchronous updating of strategies, as well as with innovations affecting demand. These results indicate how the dynamical interplay of innovators and imitators can contribute to markets variability. * We are grateful to Jeroen van den Bergh of the Autonomous University of Barcelona for lengthy discussions. We appreciate comments and suggestions from Giovanni Dosi and Luigi Marengo.