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Endogenous Growth in Production Networks

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We investigate the interplay between technological change and macroeconomic dynamics in an agent-based model of the formation of production networks. On the one hand, production networks form the structure that determines economic dynamics in the short run. On the other hand, their evolution reflects the long-term impacts of competition and innovation on the economy. We account for process innovation via increasing variety in the input mix and hence increasing connectivity in the network. In turn, product innovation induces a direct growth of the firm's productivity and the potential destruction of links. The interplay between both processes generate complex technological dynamics in which phases of process and product innovation successively dominate. The model reproduces a wealth of stylized facts about industrial dynamics and technological progress, in particular the persistence of heterogeneity among firms and Wright's law for the growth of productivity within a technological paradigm. We illustrate the potential of the model for the analysis of industrial policy via a preliminary set of policy experiments in which we investigate the impact on innovators' success of feed-in tariffs and of priority market access

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  • Stanislao Gualdi & Antoine Mandel, 2016. "Endogenous Growth in Production Networks," Documents de travail du Centre d'Economie de la Sorbonne 16054, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  • Handle: RePEc:mse:cesdoc:16054
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    Cited by:

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    2. Francesco Lamperti & Giovanni Dosi & Mauro Napoletano & Andrea Roventini & Alessandro Sapio, 2018. "And then he wasn't a she : Climate change and green transitions in an agent-based integrated assessment model," Working Papers hal-03443464, HAL.
    3. Pierre Gosselin & Aïleen Lotz & Marc Wambst, 2019. "Heterogeneity in social values and capital accumulation in a changing world," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(1), pages 47-92, March.
    4. Bondarev, Anton & Krysiak, Frank C., 2021. "Economic development and the structure of cross-technology interactions," European Economic Review, Elsevier, vol. 132(C).
    5. Giovanni Dosi & Andrea Roventini, 2019. "More is different ... and complex! the case for agent-based macroeconomics," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 1-37, March.
    6. Mandel, Antoine & Taghawi-Nejad, Davoud & Veetil, Vipin P., 2019. "The price effects of monetary shocks in a network economy," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 300-316.
    7. Raffaele Giammetti, 2019. "Tariffs, Domestic Import Substitution and Trade Diversion in Input-Output Production Networks: how to deal with Brexit," Mo.Fi.R. Working Papers 152, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    8. Lamperti, F. & Dosi, G. & Napoletano, M. & Roventini, A. & Sapio, A., 2020. "Climate change and green transitions in an agent-based integrated assessment model," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    9. Orlando Gomes, 2023. "Economic Growth Theory in the Twenty-First Century," Annals of Economics and Finance, Society for AEF, vol. 24(1), pages 39-67, May.
    10. Vipin P. Veetil, 2021. "The pausing view of unemployment," Evolutionary and Institutional Economics Review, Springer, vol. 18(2), pages 435-446, September.
    11. Giammetti, Raffaele, 2019. "Tariffs, Domestic Import Substitution and Trade Diversion in Input-Output Production Networks: how to deal with Brexit," MPRA Paper 92835, University Library of Munich, Germany.
    12. Daron Acemoglu & Pablo D. Azar, 2020. "Endogenous Production Networks," Econometrica, Econometric Society, vol. 88(1), pages 33-82, January.
    13. Veetil, Vipin P. & Wagner, Richard E., 2018. "Nominal GDP stabilization: Chasing a mirage," The Quarterly Review of Economics and Finance, Elsevier, vol. 67(C), pages 227-236.
    14. Pierre Gosselin & Aïleen Lotz & Marc Wambst, 2019. "A Statistical Field Approach to Capital Accumulation," Working Papers hal-02280634, HAL.
    15. Karl Naumann-Woleske, 2023. "Agent-based Integrated Assessment Models: Alternative Foundations to the Environment-Energy-Economics Nexus," Papers 2301.08135, arXiv.org, revised Jan 2023.
    16. Raffaele Giammetti & Alberto Russo & Mauro Gallegati, 2020. "Key sectors in input–output production networks: An application to Brexit," The World Economy, Wiley Blackwell, vol. 43(4), pages 840-870, April.
    17. Agung Suwandaru & Thamer Alghamdi & Nurwanto Nurwanto, 2021. "Empirical Analysis on Public Expenditure for Education and Economic Growth: Evidence from Indonesia," Economies, MDPI, vol. 9(4), pages 1-13, October.
    18. Chiara Freichel & Nicolas Neis & Axel Winkelmann, 2021. "A Taxonomy For Interorganizational Production Networks," Business Logistics in Modern Management, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 21, pages 167-187.

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    More about this item

    Keywords

    Production network; Network formation; Scale-free networks; Firms demographics; distribution of firms' size; Zipf law; General equilibrium; monopolistic competition; disequilibrium;
    All these keywords.

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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