The influence of innovation and imitation on economic performance
AbstractThe importance of innovation and imitation for the economy is discussed in different branches of economic theory. Some of them study the macro, others the micro level. Macroeconomic theories, concerned with technological progress usually do not explicitly distinguish between innovation and imitation. Microeconomic case studies, examine the advantage of one strategy over the other for individual firms, but do not study the macroeconomic effect of these individual behaviours. The present paper attempts to close this gap by proposing a model that is capturing the innovative and imitative activity on the individual level and the resulting performance on the macro level. This is done on the basis of a Multi-Agent simulation. The model gives a comprehensive picture of an evolving economy over time, first because it depicts the interplay of innovation and imitation and second because the agents are placed in a changing economic landscape, forcing them to discover new products. Apart from detecting a predominant strategy, the model also shows to what extend the strategies depend on each other, if the economy should develop as a whole. A main result is that the significance of innovation is overemphasized in some parts of the literature. Imitation is the more important strategy, but as it needs a sound innovative base, it actually is the right mixture between the two with a large proportion of imitation that is moving an economy ahead.
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Bibliographic InfoPaper provided by University of Kassel, Institute of Economics in its series papers on agent-based economics with number 2.
Length: 23 pages
Date of creation: May 2007
Date of revision:
Innovation; Learning; Multi-Agent-Systems; Evolutionary Economics; Genetic Algorithms; Modelling;
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