Evaluating Market Attractiveness: Individual Incentives Versus Industry Profitability
In this paper, we employ an agent-based industry simulation model to study the effects of the interplay between individual firms’ market evaluation strategies on the extent of product innovations and overall industry development. In particular, we show that a homogenous industry consisting of companies with focus on historical profits yields high overall industry profits but is very unstable. The introduction of a single firm oriented towards market growth rather than profits is sufficient to trigger a severe drop in profits and a transformation towards an industry with strong market growth orientation and a large number of marketed product innovations. Furthermore, we show that the degree of horizontal differentiation of product innovations from existing products is of significant importance for the individual incentives to adopt market growth orientation and the effects of such a development on overall industry profits. Copyright Springer Science + Business Media, Inc. 2005
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 24 (2005)
Issue (Month): 4 (June)
|Contact details of provider:|| Web page: http://www.springerlink.com/link.asp?id=100248|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320.
- Murat Yildizoglu, 2002.
"Competing R&D Strategies in an Evolutionary Industry Model,"
- Yildizoglu, Murat, 2002. "Competing R&D Strategies in an Evolutionary Industry Model," Computational Economics, Society for Computational Economics, vol. 19(1), pages 51-65, February.
- Murat Yildizoglu, 1999. "Competing R&D Strategies in an Evolutionary Industry Model," Working Papers of BETA 9914, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Murat Yildizoglu, 2002. "Competing R&D Strategies in an Evolutionnary Industru Model," Post-Print hal-00160344, HAL.
- Murat Yildizoglu, 1999. "Competing R&D Strategies in an Evolutionary Industry Model," Computing in Economics and Finance 1999 343, Society for Computational Economics.
- Jan Fagerberg, 2003.
"Schumpeter and the revival of evolutionary economics: an appraisal of the literature,"
Working Papers Archives
2003001, Centre for Technology, Innovation and Culture, University of Oslo.
- Jan Fagerberg, 2003. "Schumpeter and the revival of evolutionary economics: an appraisal of the literature," Journal of Evolutionary Economics, Springer, vol. 13(2), pages 125-159, 04.
- Bottazzi, Giulio & Dosi, Giovanni & Lippi, Marco & Pammolli, Fabio & Riccaboni, Massimo, 2001.
"Innovation and corporate growth in the evolution of the drug industry,"
International Journal of Industrial Organization,
Elsevier, vol. 19(7), pages 1161-1187, July.
- Giulio Bottazzi & Giovanni Dosi & Marco Lippi & Fabio Pammolli & Massimo Riccaboni, 2001. "Innovation and Corporate Growth in the Evolution of the Drug Industry," LEM Papers Series 2001/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Herbert Dawid & Marc Reimann, 2011. "Diversification: a road to inefficiency in product innovations?," Journal of Evolutionary Economics, Springer, vol. 21(2), pages 191-229, May.
- Boyan Jovanovic & Glenn MacDonald, 1993.
"The Life-Cycle of a Competitive Industry,"
NBER Working Papers
4441, National Bureau of Economic Research, Inc.
- Jovanovic, B. & MacDonald, G.M., 1992. "The Life-Cycle of Competitive Industry," Papers 92-09, Rochester, Business - Financial Research and Policy Studies.
- Jovanovic, B. & MacDonald, G., 1993. "The Life Cycle of a Competitive Industry," Working Papers 93-34, C.V. Starr Center for Applied Economics, New York University.
- Dawid, Herbert, 2006. "Agent-based Models of Innovation and Technological Change," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 25, pages 1235-1272 Elsevier.
- Malerba, Franco, et al, 1999. "'History-Friendly' Models of Industry Evolution: The Computer Industry," Industrial and Corporate Change, Oxford University Press, vol. 8(1), pages 3-40, March.
- Silverberg, Gerald & Verspagen, Bart, 1994. "Collective Learning, Innovation and Growth in a Boundedly Rational, Evolutionary World," Journal of Evolutionary Economics, Springer, vol. 4(3), pages 207-26, September.
- Javier Pajares & Adolfo López-Paredes & CesÃ¡reo Hernández-Iglesias, 2003. "Industry As an Organisation of Agents: Innovation and R&D Management," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 6(2), pages 7.
- Beardsley, George & Mansfield, Edwin, 1978. "A Note on the Accuracy of Industrial Forecasts of the Profitability of New Products and Processes," The Journal of Business, University of Chicago Press, vol. 51(1), pages 127-35, January.
- Cantner, Uwe & Pyka, Andreas, 1998. "Absorbing Technological Spillovers: Simulations in an Evolutionary Framework," Industrial and Corporate Change, Oxford University Press, vol. 7(2), pages 369-97, June.
- JS Armstrong & Roderick J. Brodie, 2004. "Effects of Portfolio Planning Methods on Decision Making: Experimental Results," General Economics and Teaching 0412016, EconWPA.
- Klepper, Steven, 1997. "Industry Life Cycles," Industrial and Corporate Change, Oxford University Press, vol. 6(1), pages 145-81.
- Tesfatsion, Leigh & Judd, Kenneth L., 2006. "Handbook of Computational Economics, Vol. 2: Agent-Based Computational Economics," Staff General Research Papers 10368, Iowa State University, Department of Economics.
- Simon, Herbert A, 1978. "Rationality as Process and as Product of Thought," American Economic Review, American Economic Association, vol. 68(2), pages 1-16, May.
- Malerba, Franco, 1992. "Learning by Firms and Incremental Technical Change," Economic Journal, Royal Economic Society, vol. 102(413), pages 845-59, July.
- Fagiolo, Giorgio & Dosi, Giovanni, 2003.
"Exploitation, exploration and innovation in a model of endogenous growth with locally interacting agents,"
Structural Change and Economic Dynamics,
Elsevier, vol. 14(3), pages 237-273, September.
- Giorgio Fagiolo & Giovanni Dosi, 2002. "Exploitation, Exploration and Innovation in a Model of Endogenous Growth with Locally interacting Agents," LEM Papers Series 2002/25, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
When requesting a correction, please mention this item's handle: RePEc:kap:compec:v:24:y:2005:i:4:p:321-355. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.