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Capability accumulation and product innovation: an agent-based perspective

Author

Listed:
  • Claudius Graebner

    (Institute for Socio-Economics, University of Duisburg-Essen, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)

  • Anna Hornykewycz

    (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria)

Abstract
The paper studies the relevance of product heterogeneity for innovation dynamics using an agent-based model. The vantage point is a short a review on the empirical relevance of capability accumulation for innovation processes and an assessment of how these processes are modelled theoretically in evolutionary micro and macroeconomic models. This shows that the macroeconomic literature so far has focused on process innovations. To facilitate the consideration of empirical and microeconomic insights on product innovation in macroeconomic models, a simple agent-based model, which may later serve as an innovation module in macroeconomic models, is introduced. Following up on recent empirical results, products in the model are heterogeneous in terms of their complexity and differ in their relatedness to each other. The model is used to study theoretical implications of different topological structures underlying product relatedness by conducting simulations with different 'product spaces'. The analysis suggests that the topological structure of the product space, the assumed relationship between product complexity and centrality as well as the relevance of product complexity in price setting dynamics have significant but nontrivial implications and deserve further attention in evolutionary macroeconomics. To this end, the model presented here may serve as a first step towards a module to be integrated in such a more comprehensive model framework.

Suggested Citation

  • Claudius Graebner & Anna Hornykewycz, 2020. "Capability accumulation and product innovation: an agent-based perspective," ICAE Working Papers 108, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    • Handle: RePEc:ico:wpaper:108
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    References listed on IDEAS

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    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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