On Positional Consumption and Technological Innovation- an Agent-based Approach
Positional behavior is a source of externalities and sets limits to wellbeing. Remedies against this market failure are defended by some authors and rejected by others, while the core of the discussion rests on the benefits and costs of applying economic instruments. One of the issues discussed is the role that the competition for positional goods may have in generating technological innovation. This paper aims to contribute to the understanding of this process by analyzing an agent-based model. We observe a plausible structure of the dynamics behind the process of generation of technological innovation by positional consumption and obtain results on the influence of some key factors on the pace of innovation, particularly those of income inequality, the Hirsch conjecture of relative increase of positional consumption with affluence, and consumer network and social neighborhood sizes.
|Date of creation:||Jan 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL|
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dawid, Herbert, 2006. "Agent-based Models of Innovation and Technological Change," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 25, pages 1235-1272 Elsevier.
- Tanya Araújo & R. Vilela Mendes, 2009. "Innovation And Self-Organization In A Multi-Agent Model," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 12(02), pages 233-253.
- Robert H. Frank, 2005. "Positional Externalities Cause Large and Preventable Welfare Losses," American Economic Review, American Economic Association, vol. 95(2), pages 137-141, May.
- Tanya Araujo & R. Vilela Mendes, 2006. "Market-oriented innovation: When is it profitable? An abstract agent-based study," Working Papers Department of Economics 2006/31, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Kjell Arne Brekke & Richard B. Howarth, 2000. "The Social Contingency of Wants," Land Economics, University of Wisconsin Press, vol. 76(4), pages 493-503.
- Andrew Kashdan & Daniel B. Klein, 2006. "Assume the Positional: Comment on Robert Frank," Econ Journal Watch, Econ Journal Watch, vol. 3(3), pages 412-434, September.
- Kjell Arne Brekke & Richard B. Howarth & Karine Nyborg, 1998. "Are there Social Limits to Growth?," Discussion Papers 239, Statistics Norway, Research Department.
- Axelrod, Robert & Tesfatsion, Leigh, 2006. "A Guide for Newcomers to Agent-Based Modeling in the Social Sciences," Staff General Research Papers 12515, Iowa State University, Department of Economics.
- Richard B. Howarth & Kjell Arne Brekke, 1998. "Status Preferences and Economic Growth," Discussion Papers 240, Statistics Norway, Research Department.
- Nicolaas J. Vriend, 2005.
"ACE Models of Endogenous Interactions,"
542, Queen Mary University of London, School of Economics and Finance.
- Roger Mason, 2000. "Conspicuous consumption and the positional economy: policy and prescription since 1970," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(3-4), pages 123-132.
- Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
- Robert H. Frank, 2006. "Taking Libertarian Concerns Seriously: Reply to Kashdan and Klein," Econ Journal Watch, Econ Journal Watch, vol. 3(3), pages 435-451, September.
- Wilhite, Allen, 2006. "Economic Activity on Fixed Networks," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 20, pages 1013-1045 Elsevier.
When requesting a correction, please mention this item's handle: RePEc:ise:isegwp:wp42010. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vitor Escaria)
If references are entirely missing, you can add them using this form.