Elements of a Selection Model

As was the case with search, the model presented in Chapter 9 incor­ porated a highly simplified and stylized characterization of “selec­ ti on./I In order to make good contact with the microeconomic studies of technological advance, a more complex and subtle formulation is needed, and significant intersector differences need to be recog­ nized.

The Market as a Selection Environment

The perception that market competition in a s ector constitutes a par­ ticular sort of selection environment was explicit in the writings of many of the great nineteenth- and early twentieth-century economic theorists. Schumpeter was well within this classical tradition. In a stylized Schumpeterian evolutionary system, there is both a carrot and a stick

Nonmarket Selection Environments

While economists h ave concentrated their attention on market sectors, research on the selection environment of nonmarket sectors has been undertaken principally by anthropologis ts, sociologists, and political scientists. This in itself would h ave led to some signifi­ cant differences in focus and analysis. But to a considerable extent the differences in analysis

The complex structure of the Schumpeterian arguments

It is important to emphasize that the particular view of technological change under consideration here involves considerable abstraction, even apart from its problematic separation of the technological and organizational aspects of innovation. A large number of variables clearly influence the pace and pattern of technological progress in an industry. There are many different sources

The model of Dynamic Competition and Technical Progress

The connections that link market s tructure and technical progress with o ther aspects of industry performance clearly are very complex. The modeling challenge is to devise a simple formal structure that enables the exploration of some of the more interesting of these con­ nections and that is transparent enough so that the results

Behavior of the Dynamic Competition and Technical Progress model in special cases

Simulation will be the principal tool employed to explore the model. However, in certain simple cases it is possible to achieve analytic results. Consider first the behavior of the model when firms make no e f­ forts to obtain new techniques- that is, when rin and rim are set to zero in all firms

Simulation of competition between innovators and imitators

In the remainder of this chapter we report and analyze certain results of a simulation experiment using the model. This experiment is a p reliminary exploration of the influence of initial market structure on the innovative and price performance of the industry and on the evo­ lution of industry structure over time. Other experiments

Schumpeterian Tradeoffs and policy tools

Several kinds of social costs are incurred when technological progress is “purchased” through a system of economic organization that pits private business firms against one another in a struggle for competitive advantage. One of these is the cost associated with less than competitive out­ put levels. The presence of such a cost is signaled

The experiments of Schumpeterian Tradeoff

The model we shall use to explore these issues has been described in Chapter 12 . As in that chapter, the focus here is upon the competitive struggle between firms with different R&D policies. Again as in Chapter 12, we will explore the effects of initial in­ dustry concentration upon the survivability of the

The results of the simulation experiments of Schumpeterian Tradeoff

The data from our simulations are set out in Tables 14.1-14.6. The abbreviations used in these tables should be interpreted as follows . The first row displays for period 101 the share of industry capital held by firms that do innovative R&D. In general, a share less than 0.50 indicates that firms that did

of Schumpeterian Tradeoff: Some policy and empirical implications

Undoubtedly, the difficulties that beset the literature on the Schum­ peterian arguments are in large part a reflection of the complexity and difficulty of the subject matter. But part of the problem has been that economists have not tried to confront those complexities with a model designed for that task. We have presented an

Normative Economics from an Evolutionary Perspective: Retracing a familiar path

Contemporary welfare economics sees the economic problem in two different ways: from one angle the problem is seen as that of choosing an allocation of resources; from the other vantage p oint the problem is seen as organizational. We propose that m uch of the orga­ nizational argument is implicitly evoluti onary. The allocation

Normative Economics from an Evolutionary Perspective: Reappraising the standard problems of welfare economics

Economic evolutionary dynamics is guided by information flows: in­ formation about new scientific developments, information regarding the success or failure of R&D projects to g uide the next round of R&D decisions, information regarding the characteristics of new products to g uide potential p urchasers, information regarding costs of pro­ d uction and purchases

The Evolution of Public Policies: Mechanisms and actors

Public policies evolve partly in response to changes in perceived de­ mands and opportunities, changes that may result from the evolu­ tion of private technologies and market structures or from other identifiable shifts in objective conditions. Public policies may reflect not changes in objective conditions but shifts in values, or under­ standing. Change over

The role of analysis in policy making

We use the term .” analysis” here to mean the inquiry of professionals trained in social science or in other disciplines into the policy alter­ natives, the values at stake, the likely consequences of adopting dif­ ferent policies, and the articulation of the findings of such inquiry with the express aim of illuminating and

Government policy toward industrial R&D

From the perspective sketched above, a wide range of policy analyses are potentially relevant to a particular policy discussion. At one end of the spectrum, there are studies focused on the particular policy op-tions under immediate consi deration and on plausible alternatives to these. These kinds of studies are very dependent on the particular

Retrospect of the Evolutionary Theory

We would not have been drawn to try to develop the evolutionary approach had we not come to believe that the canonical ideas of orthodox microeconomic theory obscure essential features of the pro­ cesses of economic change. The insistence on strict “maximization” in orthodox models makes it awkward to deal with the fact that,

A digression on the intellectual autarky of economics

Any sort of technical jargon tends to isolate its users intellectually, but the effect in economics seems exceptionally and unnecessarily severe. Then, too, it is well known that all specialists tend to overes­ timate the fraction of the proverbial elephant that their own gropings have discerned- but economists seem on the average to be

Prospect of the Evolutionary Theory: Theoretical Problems

In Chapter 1 we describe a class of Markov models of industry behav­ ior that is vastly larger than the set of particular models explored in this book. More significantly, there are considerations of obvious and general importance that are neglected in the models we have an­ alyzed and that must be incorporated in

Prospect of the Evolutionary Theory: Empirical Issues

An important virtue of orthodox theory is that it offers a relatively definite idea of what it is that firms do: they maximize profits, sub-ject to constraints. In practice, of course, the great diversity of the problems that can be cast into this framework, as well as the con­ flicting predictions that the resulting