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A History-Friendly Model of the Internet Access Market: The Case of Brazil

In: The Evolution of Economic and Innovation Systems

Author

Listed:
  • Marcelo Carvalho Pereira

    (University of Campinas)

  • David Dequech

    (University of Campinas)

Abstract

This paper presents a simulation model of the internet access services market. The model is based on neo-Schumpeterian evolutionary theory, as well as on the contemporary institutional theory. One key driver of the internet sector has been the significant technological opportunities. However, competition in the internet access services market has proved less intense than in other technology-driven industries in most countries, including other segments of the internet sector itself. Usual theoretical approaches do not adequately explain this empirical observation. Our hypothesis is that institutional mechanisms were determinant for the dynamics of competition. Institutions are broadly understood as socially shared, formal or informal, recurring rules of behaviour or thought. To test this hypothesis, a sectoral agent-based simulation model is proposed, modelling with some detail both demand and supply agents’ behaviours. Model parameters and initial conditions were calibrated using empirical data from the Brazilian market. The competitive mechanisms unveiled by simulation were clearly dependent on institutional processes, particularly at user preferences setting and informal business rules adoption. Institutional phenomena were strong enough to produce results that are significantly different from other technologically dynamic industries.

Suggested Citation

  • Marcelo Carvalho Pereira & David Dequech, 2015. "A History-Friendly Model of the Internet Access Market: The Case of Brazil," Economic Complexity and Evolution, in: Andreas Pyka & John Foster (ed.), The Evolution of Economic and Innovation Systems, edition 127, pages 579-610, Springer.
    • Handle: RePEc:spr:eccchp:978-3-319-13299-0_22
    DOI: 10.1007/978-3-319-13299-0_22
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    Cited by:

    1. Igor Gurkov & Michael J. Morley, 2021. "Looking In The Rear-View Mirror: A Thirty-Five Year Retrospective On The Russian Automotive Industry," HSE Working papers WP BRP 64/MAN/2021, National Research University Higher School of Economics.
    2. Peili Yu & Junguo Shi & Bert M. Sadowski & Önder Nomaler, 2020. "Catching Up in the Face of Technological Discontinuity: Exploring the Role of Demand Structure and Technological Regimes in the Transition from 2G to 3G in China," Journal of Evolutionary Economics, Springer, vol. 30(3), pages 815-841, July.
    3. Gianluca Capone & Franco Malerba & Richard R. Nelson & Luigi Orsenigo & Sidney G. Winter, 2019. "History friendly models: retrospective and future perspectives," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 9(1), pages 1-23, March.

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