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The Evolution of an Industrial Sector with a Varying Degree of Roundaboutness of Production

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  • Esben Sloth Andersen

Abstract

The evolutionary model presented in this paper depicts an industrial sector with a varying degree of economic roundaboutness, i.e. vertical division of labour between producers and users of different types of intermediate products that are ultimately used for the production of a single final product. To include this vertical aspect of industrial dynamics, the model adds the concept of production trees to the evolutionary models of Schumpeterian competition. The specification of this concept suggests the use of the notions of graph theory and the related algorithms of computer science in the treatment of industrial novelty, including structural innovations. Although the model is developed within the Nelson and Winter tradition, the introduction of the 'Austrian' issue of roundaboutness implies a major extension of the research agenda, including production- structure innovations, the emergence and functioning of markets for intermediate products, ways of coping with the instability of upstream markets, the spread of the effects of an upstream innovation, and the measurement of the degree of roundaboutness and of overall productivity. The model reflects a Schumpeterian version of the Böhm-Bawerkian vision of the emergence of increased long-term roundaboutness of production. The Schumpeterian approach implies an innovation- and entrepreneur-driven process of vertical disintegration and reintegration.

Suggested Citation

  • Esben Sloth Andersen, 1996. "The Evolution of an Industrial Sector with a Varying Degree of Roundaboutness of Production," DRUID Working Papers 96-13, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:96-13
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320.
    3. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
    4. George J. Stigler, 1951. "The Division of Labor is Limited by the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 59, pages 185-185.
    5. Silverberg, Gerald & Dosi, Giovanni & Orsenigo, Luigi, 1988. "Innovation, Diversity and Diffusion: A Self-organisation Model," Economic Journal, Royal Economic Society, vol. 98(393), pages 1032-1054, December.
    6. 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 207-226, September.
    7. G. Silverberg & B. Verspagen, 1995. "Evolutionary Theorizing on Economic Growth," Working Papers wp95078, International Institute for Applied Systems Analysis.
    8. Richard R. Nelson, 1995. "Recent Evolutionary Theorizing about Economic Change," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 48-90, March.
    9. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3, Specia), pages 783-832.
    10. Esben Sloth Andersen & Anne K. Jensen & Lars Madsen & Martin Jørgensen, 1996. "The Nelson and Winter Models RevisitedPrototypes for Computer-Based Reconstruction of Schumpeterian Competition," DRUID Working Papers 96-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    11. Witold Kwasnicki, 1996. "Knowledge, Innovation and Economy," Books, Edward Elgar Publishing, number 844, April.
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    Citations

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    Cited by:

    1. Esben Sloth Andersen, 1998. "The Dynamics of the Organisation of Industry," DRUID Working Papers 98-13, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    2. Jukka Kaisla, 1998. "The Market Process and the Emergence of the Firm Some Indications of Entrepreneurship Under Genuine uncertainty," DRUID Working Papers 98-17, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    3. Dieter Ernst, 1999. "Responses to the Crisis Constraints to a Rapid Trade Adjustment in East Asia´s Electronics Industry," DRUID Working Papers 99-2, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    4. Bengt-Åke Lundvall & Frank Skov Kristensen, 1997. "Organisational Change, Innovation and Human Resource Development as a Response to Increased Competition," DRUID Working Papers 97-16, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    5. Esben Sloth Andersen, 1999. "Multisectoral Growth and National Innovation Systems," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 25, pages 33-52.
    6. Keld Laursen, 1998. "Do Export and Technological Specialisation Patterns Co-evolve in Terms of Convergence or Divergence? Evidence From 19 OECD Countries, 1971-1991," DRUID Working Papers 98-18, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    7. Esben Sloth Andersen, 1998. "Escaping Satiation in an Evolutionary Model of Structural Economic Dynamics," DRUID Working Papers 98-9, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    8. Kirsten Foss & Nicolai J. Foss, 1999. "Organizing Economic Experiments The Role of Firms," DRUID Working Papers 99-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    9. Esben Sloth Andersen & Anne K. Jensen & Lars Madsen & Martin Jørgensen, 1996. "The Nelson and Winter Models RevisitedPrototypes for Computer-Based Reconstruction of Schumpeterian Competition," DRUID Working Papers 96-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.

    More about this item

    Keywords

    Roundaboutness; production graphs; evolutionary economic modelling; Nelson and Winter;

    JEL classification:

    • L0 - Industrial Organization - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School

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