Abstract
A model is presented of the behavior of a number of competing firms producing functionally similar products. Each firm searches for new routines and new combinations of the routines, i.e. ‘technical and organizational ideas and skills associated with a particular economic context’. Decisions of a firm related to investment, modernization of production, price, etc. are based on the firm's evaluation of the behavior of other competing firms and the expected response of the market. Firms search for new combinations of routines in order to minimize the unit cost of production, maximize the productivity of capital, and maximize the competitiveness of their products in the market. Results of simulation of the model concerning investigation of price setting procedures, and long- and short-term firms' objectives are presented.
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