An Evolutionary Simulation Model of the Effect of Innovation and Firm Dynamics on Market Power
Authored by Santos Juan Luis, Navarro Tomas Mancha, Federico Pablo-Marti
Date Published: 2016
DOI: 10.4018/ijabe.2016070103
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Abstract
This paper presents an agent-based simulation with the main insights
from business theory to study firm growth and firm dynamics in a
stochastic evolutionary model. Firm growth behavior and firm dynamics
are defined according to the results of a panel data for a set of
manufacturing markets for the Spanish economy. Then the effect of the
economic growth on firm dynamics and subsequently the effect on market
power are determined. The article shows that since the emergence of the
current crisis three industrial sectors have increased business
concentration. These three sectors were the ones with the highest
concentration out of the five sectors studied. Product and process
innovation are also included in the model and how they modify production
and demand. The model presented also shows how firms adapt to changes in
desired product characteristics and the effect of crisis on these
dynamics.
Tags
Performance
growth
Capabilities