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Exploitation, exploration and innovation in a model of endogenous growth with locally interacting agents

Listed author(s):
  • Fagiolo, Giorgio
  • Dosi, Giovanni

The paper presents a model of endogenous growth in which firms are modeled as boundedly-rational, locally interacting, agents. Firms produce a homogeneous good employing technologies located in an open-ended technological space and are allowed to either imitate existing, similar practices or to locally explore the technological space to find new, more productive techniques. We first identify sufficient conditions for the emergence of empirically plausible GNP time-series characterized by self-sustained growth. Then, we study the trade-off between individual rationality and collective outcomes by providing an example in which more rational agents systematically perform worse than less rational ones.

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File URL: http://www.sciencedirect.com/science/article/pii/S0954-349X(03)00022-5
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Article provided by Elsevier in its journal Structural Change and Economic Dynamics.

Volume (Year): 14 (2003)
Issue (Month): 3 (September)
Pages: 237-273

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Handle: RePEc:eee:streco:v:14:y:2003:i:3:p:237-273
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/525148

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  1. Giovanni Dosi & Luigi Marengo & Giorgio Fagiolo, 2003. "Learning in Evolutionary Environments," LEM Papers Series 2003/20, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  2. Ellen R. McGrattan & James A. Schmitz, 1998. "Explaining cross-country income differences," Staff Report 250, Federal Reserve Bank of Minneapolis.
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  5. Giorgio Fagiolo, 2000. "Endogenous Growth in Open-Ended Economies with Locally Interacting Agents," LEM Papers Series 2000/07, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
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  20. Dosi, Giovanni, 1982. "Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change," Research Policy, Elsevier, vol. 11(3), pages 147-162, June.
  21. John Conlisk, 1996. "Why Bounded Rationality?," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 669-700, June.
  22. Rosenberg,Nathan, 1994. "Exploring the Black Box," Cambridge Books, Cambridge University Press, number 9780521452700, December.
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  26. Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253.
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