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The footprint of evolutionary processes of learning and selection upon the statistical properties of industrial dynamics

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  • Giovanni Dosi
  • Marcelo C. Pereira
  • Maria Enrica Virgillito

Abstract

Evolutionary theories of economic change identify the processes of idiosyncratic learning by individual firms and of market selection as the two main drivers of the dynamics of industries. Are such processes able to account for the statistical regularities which industrial structures and dynamics display? In this work we address this question by means of a simple multi-firm model formalizing the mechanisms of learning and selection. As such, despite its simplicity, the model is able to robustly reproduce an ensemble of empirical stylized facts, including ample heterogeneity in productivity distributions, persistent market turbulence, and fat-tailed distribution of growth rates.

Suggested Citation

  • Giovanni Dosi & Marcelo C. Pereira & Maria Enrica Virgillito, 2017. "The footprint of evolutionary processes of learning and selection upon the statistical properties of industrial dynamics," Industrial and Corporate Change, Oxford University Press, vol. 26(2), pages 187-210.
  • Handle: RePEc:oup:indcch:v:26:y:2017:i:2:p:187-210.
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    Cited by:

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    2. Pascal Seppecher & Isabelle L Salle & Marc Lavoie, 2018. "What drives markups? Evolutionary pricing in an agent-based stock-flow consistent macroeconomic model," Industrial and Corporate Change, Oxford University Press, vol. 27(6), pages 1045-1067.
    3. Giovanni Dosi & Andrea Roventini & Emanuele Russo, 2020. "Public policies and the art of catching up: matching the historical evidence with a multi-country agent-based model," Documents de Travail de l'OFCE 2020-18, Observatoire Francais des Conjonctures Economiques (OFCE).
    4. Giovanni Dosi & Emanuele Pugliese & Pietro Santoleri, 2017. "Growth and survival of the `fitter'? Evidence from US new-born firms," LEM Papers Series 2017/06, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. G. Dosi & M. C. Pereira & M. E. Virgillito, 2018. "On the robustness of the fat-tailed distribution of firm growth rates: a global sensitivity analysis," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 13(1), pages 173-193, April.
    6. Dosi, G. & Piva, M. & Virgillito, M.E. & Vivarelli, M., 2021. "Embodied and disembodied technological change: The sectoral patterns of job-creation and job-destruction," Research Policy, Elsevier, vol. 50(4).
    7. Dosi, Giovanni & Roventini, Andrea & Russo, Emanuele, 2019. "Endogenous growth and global divergence in a multi-country agent-based model," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 101-129.
    8. Jakub Growiec & Fabio Pammolli & Massimo Riccaboni, 2020. "Innovation and Corporate Dynamics: A Theoretical Framework," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 12(1), pages 1-45, March.
    9. Heinrich, Torsten & Dai, Shuanping, 2016. "Diversity of firm sizes, complexity, and industry structure in the Chinese economy," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 90-106.
    10. Uwe Cantner & Simone Vannuccini, 2017. "Innovation and lock-in," Chapters, in: Harald Bathelt & Patrick Cohendet & Sebastian Henn & Laurent Simon (ed.), The Elgar Companion to Innovation and Knowledge Creation, chapter 11, pages 165-181, Edward Elgar Publishing.
    11. Dosi, Giovanni & Grazzi, Marco & Moschella, Daniele, 2015. "Technology and costs in international competitiveness: From countries and sectors to firms," Research Policy, Elsevier, vol. 44(10), pages 1795-1814.
    12. Klaus Friesenbichler & Werner Hölzl, 2020. "High-growth firm shares in Austrian regions: the role of economic structures," Regional Studies, Taylor & Francis Journals, vol. 54(11), pages 1585-1595, November.
    13. Heinrich, Torsten, 2016. "The Narrow and the Broad Approach to Evolutionary Modeling in Economics," MPRA Paper 75797, University Library of Munich, Germany.
    14. Giovanni Dosi & Mariacristina Piva & Maria Enrica Virgillito & Marco Vivarelli, 2019. "Technology and employment in a vertically connected economy: a model and an empirical test," DISCE - Quaderni del Dipartimento di Politica Economica dipe0005, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    15. Isabel Almudi & Francisco Fatas-Villafranca & Jesus Palacio & Julio Sanchez-Choliz, 2020. "Pricing routines and industrial dynamics," Journal of Evolutionary Economics, Springer, vol. 30(3), pages 705-739, July.
    16. ARATA Yoshiyuki & ONOZAKI Tamotsu, 2017. "A Compositional Data Analysis of Market Share Dynamics," Discussion papers 17076, Research Institute of Economy, Trade and Industry (RIETI).
    17. Arata, Yoshiyuki, 2019. "Firm growth and Laplace distribution: The importance of large jumps," Journal of Economic Dynamics and Control, Elsevier, vol. 103(C), pages 63-82.
    18. Lucrezia Fanti, 0. "‘Kaldor Facts’ and the decline of Wage Share: An agent based-stock flow consistent model of induced technical change along Classical and Keynesian lines," Journal of Evolutionary Economics, Springer, vol. 0, pages 1-37.
    19. Mauro Napoletano & Eric Guerci & Nobuyuki Hanaki, 2018. "Recent advances in financial networks and agent-based model validation," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 13(1), pages 1-7, April.
    20. G Dosi & M C Pereira & A Roventini & M E Virgillito, 2018. "Causes and consequences of hysteresis: aggregate demand, productivity, and employment," Industrial and Corporate Change, Oxford University Press, vol. 27(6), pages 1015-1044.
    21. Nicola Bellomo & Giovanni Dosi & Damian A. Knopoff & Maria Enrica Virgillito, 2020. "From particles to firms: a kinetic model of climbing up evolutionary landscapes," LEM Papers Series 2020/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    22. Giovanni Dosi & Maria Enrica Virgillito, 2016. "In order to stand up you must keep cycling: change and coordination in complex evolving economies," LEM Papers Series 2016/39, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    23. Giovanni Dosi & Marcelo C. Pereira & Andrea Roventini & Maria Enrica Virgillito, 2018. "Causes et consequences of hysteresis : aggregate demand, productivity and employment," Sciences Po publications info:hdl:2441/4h9cnu4n2k8, Sciences Po.

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    More about this item

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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