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The Footprint Of Evolutionary Processes Of Learning And Selection Upon The Statistical Properties Of Industrial Dynamics

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  • MARCELO DE CARVALHO PEREIRA
  • GIOVANNI DOSI
  • MARIA ENRICA VIRGILLITO

Abstract

Evolutionary theories of economic change identify the processes of idiosyncratic learningby individual firms and of market selection as the two main drivers of the dynamics of industries. Are such processes able to robustly account for the statistical regularities which industrial structures and dynamics display? In this work we address this question by means of a simple agent-based model formalizing the mechanisms of learning and selection. The interplay between these two engines shapes the dynamics of entry-exit and market shares and, collectively, the productivity and the size distributions and their patterns of growth. As such, and despite its simplicity, the model is able to robustly reproduce an ensemble of empirical stylised facts, including ample heterogeneity in productivity distributions, persistent market turbulence and fat-tailed distribution of growth rates.
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  • Marcelo De Carvalho Pereira & Giovanni Dosi & Maria Enrica Virgillito, 2016. "The Footprint Of Evolutionary Processes Of Learning And Selection Upon The Statistical Properties Of Industrial Dynamics," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 162, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    • Handle: RePEc:anp:en2015:162
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    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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