How fast to run in the Red Queen race?

Authored by Matthew Oldham

Date Published: 2018

DOI: 10.1002/isaf.1419

Sponsors: No sponsors listed

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Model Documentation: Other Narrative Flow charts Mathematical description

Model Code URLs: Model code not found

Abstract

This paper creates a market ecosystem, via an agent-based model, that combines the dynamic features of the Red Queen effect with well-accepted business world performance indicators. Essentially, firms are tasked with remaining alive' by adapting to their environment through implementing a competitive response of innovating or imitating. An analysis of the firms' behaviours delivers a deep understanding of the drivers of innovative behaviour within the economy. The key findings of the paper are (1) that concentrated markets are not entirely detrimental to innovative behaviour, with the blend of firm type being a more important consideration, and (2) that the rate at which an innovation impairs existing markets affects the activity levels of the firms within the population. The model's results are validated against a matching study based on real-world data.

Tags

Agent-based model Evolution Innovation Market Red Queen Creative destruction Competition policy