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Defence firms facing liberalization: innovation and export in an agent-based model of the defence industry


  • Blom, Martin
  • Castellacci, Fulvio
  • Fevolden, Arne


The paper presents an agent-based simulation model of the defence industry. The model resembles some of the key characteristics of the European defence sector, and studies how firms in this market will respond to the challenges and opportunities provided by a higher degree of openness and liberalization in the future. The simulation analysis points out that European defence firms will progressively become more efficient, less dependent on public procurement and innovation policy support, and more prone to knowledge sharing and inter-firm collaborations. This firm-level dynamics will in the long-run lead to an increase in the industry’s export propensity and a less concentrated market.

Suggested Citation

  • Blom, Martin & Castellacci, Fulvio & Fevolden, Arne, 2012. "Defence firms facing liberalization: innovation and export in an agent-based model of the defence industry," MPRA Paper 35702, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:35702

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    References listed on IDEAS

    1. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    2. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
    3. Dosi, Giovanni & Fagiolo, Giorgio & Roventini, Andrea, 2010. "Schumpeter meeting Keynes: A policy-friendly model of endogenous growth and business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 34(9), pages 1748-1767, September.
    4. Koen Frenken, 2006. "Technological innovation and complexity theory," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(2), pages 137-155.
    5. Nigel Gilbert & Andreas Pyka & Petra Ahrweiler, 2001. "Innovation Networks - a Simulation Approach," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 4(3), pages 1-8.
    6. Franco Malerba & Fabio Montobbio, 2003. "Exploring factors affecting international technological specialization: the role of knowledge flows and the structure of innovative activity," Journal of Evolutionary Economics, Springer, vol. 13(4), pages 411-434, October.
    7. Gilbert, Nigel & Ahrweiler, Petra & Pyka, Andreas, 2007. "Learning in innovation networks: Some simulation experiments," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 378(1), pages 100-109.
    8. Koen Frenken & Alessandro Nuvolari, 2004. "The early development of the steam engine: an evolutionary interpretation using complexity theory," Industrial and Corporate Change, Oxford University Press, vol. 13(2), pages 419-450, April.
    9. Malerba, Franco & Orsenigo, Luigi, 1996. "Schumpeterian patterns of innovation are technology-specific," Research Policy, Elsevier, vol. 25(3), pages 451-478, May.
    10. Andreas Pyka & Nigel Gilbert & Petra Ahrweiler, 2006. "Simulating Knowledge-Generation and -Distribution Processes in Innovation Collaborations and Networks," Discussion Paper Series 287, Universitaet Augsburg, Institute for Economics.
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    Cited by:

    1. Jackie Krafft & Francesco Quatraro & Pier Paolo Saviotti, 2014. "The Dynamics of Knowledge-intensive Sectors' Knowledge Base: Evidence from Biotechnology and Telecommunications," Industry and Innovation, Taylor & Francis Journals, vol. 21(3), pages 215-242, April.

    More about this item


    Defence industry; liberalization; EU; export; innovation; agent-based simulation model;

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • F1 - International Economics - - Trade
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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