Schumpeterian Competition Research Articles

Um modelo evolucionário Norte-Sul

A North-South evolutionary model. This work expands the classical Nelsonand Winter model of Schumpeterian competition by including two sectors and aNorth-South dynamics, with a view to analyzing how different institutions andtechnological regimes affect the processes of convergence and divergence in theinternational economy. The results suggest that convergence may emerge out ofthe efforts for imitation in the South when the technological regime is cumulative.But when the regime is science-based, imitation is not enough for a successfulcatching-up. In this case convergence requires the South to invest in innovation aswell. The work also analyses the robustness of the model results using Montecarlotechniques. Key-words: Evolutionary Model, Economic Growth, Innovation and TechnologicDiffusion, Conditional Convergence.JEL Classification: O41, O33, F43.

Managing Local Labour Markets and Making up New Spaces of Welfare

The dissolution of the old mechanisms of state welfare has not yet led to the generation of a new welfare settlement, although the rise of neoliberalism and of what Jessop has called the Schumpeterian Competition State have highlighted some key directions of change. The importance of geographical inequality and unevenness to the process of reshaping welfare has been widely recognised, and the fragmentation and decentralisation of employment and social policies are giving rise to the production of new welfare spaces, which institutionalise the new arrangements, helping to make up neoliberalism in practice. These issues are discussed with the help of case studies of two contrasting areas: Sheffield, a city recently experiencing economic restructuring and high levels of labour-market adjustment and employment deprivation; and Milton Keynes, a city which has been a growth area within the South East since the 1960s and which is earmarked for further employment and the location of planned population and employment growth. The ways in which new welfare spaces are being produced is explored through a consideration of the configuration of partnerships around the governance of workfare, welfare, and competitiveness within these cities.

The Future of the Capitalist State

List of Boxes. List of Tables and Figure. Preface. Abbreviations. Introduction. 1. Capitalism and the Capitalist Type of State. 2. The Keynesian Welfare National State. 3. The Schumpeterian Competition State. 4. Social Reproduction and the Workfare State. 5. The Political Economy of State Rescaling. 6. From Mixed Economy to Metagovernance. 7. Towards Schumpeterian Workfare Postnational Regimes?. Notes. References. Index.

Truth in Fiction: An Economic Interpretation of the Modern Novel with Case Studies of Lolita, a Bend in the River, and the House of Mirth

Economic analysis offers a powerful tool for analyzing fictional works. In turn, fiction can vividly illustrate the truths of economics. As others have recognized, literature can help introduce students to economic ideas in a non-mathematical way. Yet current empirical research consists primarily of interpreting literary passages deliberately chosen to illustrate particular economic concepts. I suggest that, by adopting the literary community's methodology of dissecting entire works and by analyzing novels considered great for reasons unrelated to economics, economists can reach an even wider audience. Here, I use three classic novels - Lolita, A Bend in the River, and The House of Mirth - to illuminate concepts in game theory, dynamic modeling and Schumpeterian competition, and optimization within informal markets.

Strategizing by firms in the presence of markets for resources

Strategizing by firms from the resource-based view is concerned with the process through which firms acquire a distinctive bundle of resources that is costly and time-consuming for competitors to duplicate or imitate. A central question facing any firm, therefore, is its strategy for accumulating the resources that underpin its production activities. In this article, the process of resource accumulation is discussed as one involving potentially both internal resource development and external resource acquisition, from the perspective of the strategic issues involved in making a choice between these options. Emerging markets for technologies and know-how, through licensing and other forms of resource exchange, have opened up new avenues through which firms may jostle for advantage. The article is concerned with three major aspects of this process, illustrating the discussion with cases from biotechnology and pharmaceuticals. First, the strategizing by firms around the 'internal development' vs. 'external sourcing' issue is discussed, as informed by the practices of leading firms, and how these lend greater variety of strategic options for firms; second, the potential competitive advantages as well as disadvantages to be secured by firms through the process of external sourcing (as compared with the well-known potential advantages accruing to incumbents through internal development, such as time compression diseconomies and causal ambiguity); and third, the criteria to be used by firms to strategically evaluate resources individually, as contrasted with the strategic evaluation of the resource bundle, or totality. These criteria, it is argued, turn on the issues of marginal value contribution, resource complementarities and synergies, resource variety and transferability (involving intellectual property issues). Successful firms, it is argued, expand their options through blending internal resource accumulation with external resource leverage, thereby deepening their distinctive dynamic capabilities. This approach extends the framework of the RBV, enabling it to encompass resource-driven Schumpeterian competition and such aspects of industrial dynamics as specialization, modularization and imitative challenge. Copyright 2003, Oxford University Press.

Private Regulation to Appropriate Value from Design Innovations: Implications for Anti-trust Policy

Co-operative ventures among rivals are looked upon in general with suspicion by antitrust authorities. In this paper, we position ourselves in the school of thought that evaluates collusive behavior among rivals with the Schumpeterian concept of dynamic competition in mind rather than the concept of Neoclassical perfect competition. We argue that whenever firms have difficulty in appropriating sufficient returns from their innovations, certain forms of apparently collusive behavior--or, more precisely, 'private regulation'--may actually stimulate investment in innovation and thereby Schumpeterian competition. A study of firms' strategies to appropriate value from design innovations in the Dutch and Italian furniture industry illustrates our arguments.

The Economics of the Microsoft Case

This paper explains the economics of Microsoft's anticompetitive actions, both the goal of suppressing Schumpeterian competition and the methods of denying widespread distribution to innovative new technologies. An understanding of the economics of the industry supports the logic of the government's antitrust case against Microsoft. Competition in the short run is limited by the network effects surrounding products like Microsoft Windows. Competition in the long run is far more feasible, but not automatic. The purpose of Microsoft's anticompetitive actions was to prevent widespread distribution of innovative technologies whose market success would have fostered long run competition. With that analysis in hand, this paper examines the effects of Microsoft's anticompetitive acts on the industry to determine whether and how the suppression was harmful to users of computers.

The Social Value of Biodiversity for R&D

The value of genetic resources for use in research and development (R&D)activities has been the subject of a literature modelling the activity as onewhere individual firms engage in optimal search. Here we develop a moregeneralised framework in which genetic resources are used in R&D at thebase of an industry that addresses recurring problems of resistance, as inthe pharmaceutical or plant breeding industries. The R&D process is onein which firms are engaging in a continuing contest of innovation againsta background of both creative destruction (Schumpeterian competition) andadaptive destruction (natural selection and adaptation). This frameworkdemonstrates that the search model is conceptually inadequate because itfails to incorporate the important dynamic characteristics of biologicalphenomena. We then demonstrate the important differences between firm-based valuation of genetic resources and the social value of geneticresources for use in this contest of innovation. There are six externalitiesin private patent-based genetic resource valuation, and five of theseindicate that private valuations will under-estimate social values.

Some Economic Aspects of Antitrust Analysis in Dynamically Competitive Industries

Competition in many important industries centers on investment in intellectual property. Firms engage in dynamic, Schumpeterian competition for the market, through sequential winner-take-all races to produce drastic innovations, rather than through static price/output competition in the market. Sound antitrust economic analysis of such industries requires explicit consideration of dynamic competition. Most leading firms in these dynamically competitive industries have considerable short-run market power, for instance, but ignoring their vulnerability to drastic innovation may yield misleading conclusions. Similarly, conventional tests for predation cannot discriminate between practices that increase and those that decrease consumer welfare in winner-take-all industries. Finally, innovation in dynamically competitive industries often involves enhancing feature sets; there is no sound economic basis for treating such enhancements as per se illegal ties.

Some Economic Aspects of Antitrust Analysis in Dynamically Competitive Industries

Competition in many important industries centers on investment in intellectual property. Firms engage in dynamic, Schumpeterian competition for the market, through sequential winner-take-all races to produce drastic innovations, rather than through static price/output competition in the market. Sound antitrust economic analysis of such industries requires explicit consideration of dynamic competition. Most leading firms in these dynamically competitive industries have considerable short-run market power, for instance, but ignoring their vulnerability to drastic innovation may yield misleading conclusions. Similarly, conventional tests for predation cannot discriminate between practices that increase and those that decrease consumer welfare in winner-take-all industries. Finally, innovation in dynamically competitive industries often involves enhancing feature sets; there is no sound economic basis for treating such enhancements as per se illegal ties.

The Impact of Profitability, Financial Fragility and Competitive Regime Shifts on Investment Demand: Empirical Evidence

Crotty and Goldstein have developed a hybrid post-Keynesian/neo-Schumpeterian theory of investment demand. In this micro-founded theory of accumulation, the optimal investment decision depends on the level of expected profitability, the degree of competition, and the degree of financial fragility. Its core assumptions are: i) the future is unknowable in principle, ii) physical capital is illiquid and the accumulation process is substantially irreversible, iii) managers and owners are distinct economic agents with an unresolved principal-agent conflict, and iv) management seeks the long-term growth and financial stability of the firm itself, and guards its decision-making authority against encroachment by stockholders and creditors. In this model, there is an unavoidable growth-safety tradeoff: the firm's drive for growth and profits is constrained by management's desire for financial security and decision-making autonomy. In this paper, Crotty and Goldstein seek to provide empirical support for their earlier model through a polynomial-distributed lag regression analysis of the determinants of the rate of accumulation in the U.S. manufacturing sector between 1954 and 1988. The manufacturing sector was chosen as affording the best test of the Schumpeterian competition effect. The authors test econometrically for the presence of regime shifts at the end of the 1960s and the beginning of the 1980s--two periods in which foreign competition appears to have increased significantly. The econometric results establish a strong Schumpeterian competition effect, in which intensified competition compels firms to undertake additional investment to defend existing illiquid capital. In addition, there is strong support for the notion of a post-Keynesian growth/financial security/autonomy tradeoff in the determination of the level of investment. Finally, the profit rate/competition/financial security nexus allows the authors to explain important trends in the post-war accumulation of capital.

The Nelson and Winter Models Revisited: Prototypes for Computer-Based Reconstruction of Schumpeterian Competition

The report deals with the reconstruction and further development of the models of industrial dynamics developed by Nelson and Winter and summarised in their famous 1982-book. The basic idea underlying the Nelson and Winter models is that a verbal account of Schumpeterian competition can naturally be transformed into a description of a computational process in which firms not only make short-term production decisions and investment decisions but also performs a search for new technologies. The latter search is successful in a probabilistic manner, and its successes and failures determine an evolutionary process of the industry. Although the simulation models of Nelson and Winter have played a central role the ‘take-off’ of evolutionary economics, they have never been fully documented and their differences have never been explored. The resulting problems are obvious for students who start from Nelson’s and Winter’s most famous accounts, but even for researchers with a full collection of the underlying research papers, the situation is quite confusing. The report tries to make things easier by presenting overviews of the structure of Nelson and Winter models as well as fully implemented versions of their simulation models ‐ especially NELWIN78 based on ch. 13 of the 1982-book and NELWIN77 based on ch. 12. The report furthermore presents a computer-based environment (implemented in MAPLE V Rev2) for revision of the models and for analysis of the overwhelming number of data resulting from simulation runs.

Schumpeterian process competition, welfare and laissez-faire: An experiment in artificial economic evolution

A simulation model is used to construct a regime of artificial economic evolution, where Schumpeterian process competition prevails, in the presence of technological uncertainty and bounded rationality. The output decision of the firm is represented by a behavioural algorithm, which allows for the presence of collusive behaviour. The purpose of the experiments is to go some way towards addressing the twin issues of the nature of the relationship between market structure and industry performance in a dynamic setting, and the contention that the evolutionary metaphor implies a laissez-faire stance with respect to policy issues. Under the simplifying assumptions of the model, experiments suggest that industries which generate high average concentration over a given period can compare favourably with industries that generate low average concentration, if the time profiles of both welfare and concentration are analysed. Also, the experiments suggest that the industry will naturally evolve a structure best suited to exploit the technological environment, but despite this there is still a role for intervention into the competitive process.

Schumpeterian competition and environmental R&D

Companies' emissions-reducing R&D investments increase in response to Schumpeterian competition—R&D rivalry among large firms—in the context of evolving emissions regulation. Estimation supports a theoretical role for emissions standards: to reduce negative externalities caused by hazardous air emissions, government can set standards that cause firms to accept the uncertainty of R&D. Furthermore, the pressure of R&D competition causes firms to increase their R&D investment. The paper uses primary data about manufacturers' emissions-reducing R&D. Responses to a questionnaire—mailed to the companies in the Business Week R&D Scoreboard sample for 1993—provide the new data about R&D to reduce the toxic air emissions of chemicals targeted in Title III of the 1990 Clean Air Act. The Act stimulated R&D investments by establishing the government's commitment to develop standards—which are still evolving—for the toxic chemicals. © 1997 John Wiley & Sons, Ltd.

Schumpeterian competition and environmental R&D

Schumpeterian competition and environmental R&D

Schumpeterian competition in heterogeneous oligopolies

The modeling of Schumpeterian competition as a process of innovation, imitation and selection was first presented by Nelson/Winter (1982) in a simulation study and further analyzed in a similar but general analytical formulation by Iwai (1984a, 1984b). Their results concerning the relations between the combination of the different forces of Schumpeterian competition and market structure respectively the distributions of profits are interesting, but restricted to competitive markets. Comparing rules of thumb and satisficing for the R&D decisions the present study analyzes the process of Schumpeterian competition in a heterogeneous oligopoly. Firstly, the authors find for the R&D-concentration relation results contrary to the traditional interpretation of Schumpeter. Secondly, Iwai's (1984a, 1984b) qualitative results hold in this less restrictive modeling.

Schumpeterian competition in heterogeneous oligopolies

Schumpeterian competition in heterogeneous oligopolies

Evolutionary Economics: Post-Schumpeterian Contributions.

Approaching economic evolution schemes of punctuated evolution and jerky innovations density-dependent diffusion and innovation exploring the process of Schumpeterian competition the evolution of strategies in transaction research horizons. Appendix: Algorithmic notation and the programming of Nelson-and-Winter models.

Long waves and ‘evolutionary chaos’ in a simple Schumpeterian model of embodied technical change

Since Schumpeter, an extensive debate has taken place concerning the relationship between innovation, diffusion, macrodynamics, and the purported existence of long Kondratieff waves of economic activity. Rosenberg and Fritschtak have rightly pointed out that until now no conceptually consistent model has been proposed that would allow a scientific discussion of the causalities involved. By generalizing a previous model of Schumpeterian competition and ‘creative destruction’ based on the Goodwin growth cycle these various elements can be related naturally in a simple dynamic model. Mathematically, the model is equivalent to a large-dimensional Lotka-Volterra system with stochastically perturbed coefficients. Allowing for the introduction of new techniques according to various possible stochastic processes such as time-homogeneous or inhomogeneous Poisson, computer experiments reveal an intriguing and robust pattern of distributed ‘long waves’. Application of the Grassberger-Procaccia correlation dimension suggests that we may be dealing with an unusual form of low-dimensional ‘deterministic’ chaos as an emergent property of a basically stochastic system. We have termed this phenomenon ‘evolutionary chaos’. Empirical analysis of several innovation time series indicates that innovations have been arriving stochastically, but at an exponentially growing rate and somewhat more clustered than Poisson.

The estimation of Barone-curves based on the Iwai-model

Based on the evolutionary model of Iwai, the authors show that the supply curve of Barone can be interpreted as an outcome of the dynamic process of Schumpeterian competition By using empirically given distributions of profits, the Barone-curve can be estimated significantly for different industries of the Federal Republic of Germany. In this respect, the paper at hand not only provides a strong argument for the validity of the Iwai-model, but also gives important insights into the individual forces of Schumpeterian competition and their impact on the market structures in an economy.