Gaining the competitive edge using internal and external spillovers: a dynamic analysis
AbstractThis paper studies the evolution of two clusters of firms competing on a common market. Firms exit and enter a cluster based on the perceived chances for profits inside and outside the cluster. Information about profits are diffused by direct communication between firms. Internal and external spillover effects reduce the overall costs of firms in the clusters depending on the number of firms in the own and the competing cluster. A discrete time deterministic dynamical system describing the evolution of cluster sizes is derived. An analysis of the long run attractors of the system and their basins of attraction is used to compare the effects of advantages of a cluster with respect to the size of internal and external spillover effects, respectively. Furthermore, the implications of slow and fast exit and entry behavior of firms for the long run survival and the size of the clusters are studied.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Dynamics and Control.
Volume (Year): 27 (2003)
Issue (Month): 11 ()
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Web page: http://www.elsevier.com/locate/jedc
Spillover effects; Evolutionary dynamics; Equilibrium selection; Basins of attraction; Critical curves;
Other versions of this item:
- Bischi, G. -I. & Dawid, H. & Kopel, M., 2003. "Gaining the competitive edge using internal and external spillovers: a dynamic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 27(11-12), pages 2171-2193, September.
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
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