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Schumpeterian process competition, welfare and laissez-faire: An experiment in artificial economic evolution

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  • Timothy M. Wakeley

    () (School of Management, University of Bath, Claverton Down, Bath BA2 7AY, UK)

Abstract

A simulation model is used to construct a regime of artificial economic evolution, where Schumpeterian process competition prevails, in the presence of technological uncertainty and bounded rationality. The output decision of the firm is represented by a behavioural algorithm, which allows for the presence of collusive behaviour. The purpose of the experiments is to go some way towards addressing the twin issues of the nature of the relationship between market structure and industry performance in a dynamic setting, and the contention that the evolutionary metaphor implies a laissez-faire stance with respect to policy issues. Under the simplifying assumptions of the model, experiments suggest that industries which generate high average concentration over a given period can compare favourably with industries that generate low average concentration, if the time profiles of both welfare and concentration are analysed. Also, the experiments suggest that the industry will naturally evolve a structure best suited to exploit the technological environment, but despite this there is still a role for intervention into the competitive process.

Suggested Citation

  • Timothy M. Wakeley, 1998. "Schumpeterian process competition, welfare and laissez-faire: An experiment in artificial economic evolution," Journal of Evolutionary Economics, Springer, vol. 8(1), pages 45-66.
  • Handle: RePEc:spr:joevec:v:8:y:1998:i:1:p:45-66
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    Cited by:

    1. Wakeley, Tim, 2002. "The New Evolutionary Microeconomics: Complexity, Competence and Adaptive Behaviour: Jason Potts; Cheltenham: Edward Elgar, xii + 239. Hardcover 2000, ISBN 1-84064-543-1, [UK pound]49.95, $80.00; Paper," Journal of Economic Psychology, Elsevier, vol. 23(2), pages 279-286, April.
    2. Powell, John H. & Wakeley, Timothy M., 2003. "Evolutionary concepts and business economics: Towards a normative approach," Journal of Business Research, Elsevier, vol. 56(2), pages 153-161, February.

    More about this item

    Keywords

    Artificial economic evolution ; Schumpeterian competition ; Bounded rationality ; Collusion ; Laissez-faire;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • D6 - Microeconomics - - Welfare Economics

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