IDEAS home Printed from
   My bibliography  Save this paper

An agent based approach to analysis of Capital structure and industry dynamics: The role of policy


  • Roberto GABRIELE
  • Enrico ZANINOTTO


The paper analyses the role of capital structure of firm on industry dynamics. Empirical evidence shows that policy interventions can alter for some the frims�cost of the capital. As a result firms on average are overcapitalized with a low capital productivity. Moreover, the market in which capital is cheap seems to be able to reduce consistently the entry and the exit of firms: the competitive process is obscured and selection is sterilized. We argue that the distortions induced by an anomalous endowment of capital input can have two effects in the market: (a) A raise in firms� heterogeneity; (b) a distortion of the process of acquisition of technical progress. We used an agent based model to explore the issue. Firms in the model are heterogeneous bounded rational and endowed with a two inputs fixed coefficients technology. Technical progress is embodied in the new capital stock and modifies the combination of the two inputs. The cost of the capital input is one of the relevant parameter of the model. Each capital stock can have short (SL) or long life (LL). The policy interventions finance the LL investments so that its price will be on average lower than for SL. Firms have to choose in each period between two strategies: A cost reducing one�in the present choosing to invest in LL-, or a productivity augmenting one�as a stochastic outcome of the investment in SL. The model is programmed using SWARM platform and it is explored through Montecarlo simulations.

Suggested Citation

  • Roberto GABRIELE & Enrico ZANINOTTO, 2004. "An agent based approach to analysis of Capital structure and industry dynamics: The role of policy," Computing in Economics and Finance 2004 296, Society for Computational Economics.
  • Handle: RePEc:sce:scecf4:296

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item


    Agent based models; capital structure; Industry dynamics; Leontief production function;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sce:scecf4:296. 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: (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.