To innovate or not to innovate

In this paper we analyze the evolution of output decisions of adaptive firms in an environment of oligopolistic competition. The firm might either choose to produce one of several existing product variants or try to establish a new product variant on the market. The demand for each individual product variant is subject to a life-cycle, but aggregate demand for product variants is constant over time. Every period each firm has to decide whether to produce the product again, to introduce a new product variant itself (which generates an initial advantage on that market), or to follow another firm and change to the production of an already established product. Different firms have heterogeneous abilities to develop products respectively imitate existing designs, and therefore the effects of the decision whether to imitate existing designs or to innovate differ between firms. We examine the evolution of behavior in this market using an agent based simulation model. The firms are endowed with simple rules to estimate market potentials and market founding potentials of all firms including themselves, and make their decisions using a stochastic learning rule. Furthermore, the characteristics of the firms change dynamically due to 'learning by doing' effects. The main questions discussed are how the success and the optimal strategy of a firm depend on the interplay between characteristics of the industry and properties of the firm.Series: Working Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science

To Innovate or not to Innovate in the Didactic Second Language Scenario (and How) – that Is the Question?

The development and the evolution of digital information technologies have orchestrated the most significant advance in the history of second language didactics, in particular, in its online and/or distance modalities. This new era of Distance Foreign Language Learning, overrun by digital learning, social and gaming tools, has caused an authentic education revolution, qualified by significant researchers as disruptive. The rapid changes in the application of Information and Communication Technology (ICT) to education require carrying out urgently studies that analyse rigorously the potential benefits of this new digital media adoption, sometimes thoughtless and even unjustified, in the area of second language didactics..

To Innovate or Not to Innovate, That Is the Question: The Functions, Failures, and Foibles of the Reward Function Theory of Patent Law in Relation to Computer Software Platforms

The patent system has traditionally been viewed as having two primary functions: the reward function and the prospect function. Although these theories do explain some behavior which results from the practical applications of the patent system, they also overlook some behavior of the patent system which indicates a failure of these functions. In order to properly prevent such failure, this paper proposes that the patent system adopt an orientation that will lead to increased innovative rivalry and competition. In Part I, using the computer operating system software market as an example, I propose a framework for reconceptualizing patent protection as it applies to software operating system platforms. Part II briefly examines both the classical and neoclassical reward function and prospect function theories. Part III defines the innovation market and describes the market dynamics that create disincentives for innovation. These disincentives tend to limit the number of competitors in innovation markets and create conditions which reduce the effectiveness of the reward incentives to the extent that the reward function fails in its entirety. Part IV examines the resulting harms of this failure and identifies how reward function failure affects product markets, which are dependent upon the reward function. Part V discusses why the prospect function does not address the problems related to reward function failure and the reasons that the promotion of innovative rivalry would alleviate some of the problems. Part VI uses the relationship between computer programs to illustrate the shortcomings of the patent system\u27s inability to prevent the problems created by non-competitive innovation. This section also considers how the patent system might be better adjusted to prevent reward function failure. Lastly, Part VI also proposes a series of alternative frameworks for creating a competitively oriented approach to the application of the patent system in the case of computer software platforms

Education, Neighbourhood Effects and Growth: An Agent Based Model Approach

Endogenous, ideas-led, growth theory and agent based modelling with neighbourhood effects literature are crossed. In an economic overlapping generations framework, it is shown how social interactions and neighbourhood effects are of vital importance in the endogenous determination of the long run number of skilled workers and therefore of the growth prospects of an economy. Neighbourhood effects interact with the initial distribution of educated agents across space and play a key role in the long run stabilisation of the number of educated individuals. Our model implies a tendency towards segregation, with a possibly positive influence on growth, if team effects operate. The long run growth rate is also shown to depend on the rate of time preference. Initial circumstances are of vital importance for long run outcomes. A poor initial education endowment will imply a long run reduced number of skilled workers and a mediocre growth rate, so there no economic convergence tendency. On the contrary, poor societies will grow less, or will even fall into a poverty trap, and will diverge continuously from richer ones.agent modelling; economic growth; education; human capital; neighbourhood effects; poverty trap.

Protecting Your Turf: First-mover Advantages as a Barrier to Competitor Innovation

Product innovation for a juice company and its associated first-mover advantages are analyzed. Stochastic simulation is used to model market size, price, competitive intensity, and the likelihood of competitor entry. Results of moving first allow the firm to capture market share, realize first-mover advantages in excess of $2 million, and deter competitor innovation. In addition, the proposed model is flexible enough to be applied in other industries.Product innovation, first-mover advantages, barriers to entry, stochastic simulation, uncertainty, Research and Development/Tech Change/Emerging Technologies,

Are command economies unstable? why did the soviet economy collapse?

A transformational recession? Between 1989 and 1992 Soviet GDP per head fell by approximately 40 per cent. In asking why this happened we may hope to learn about the nature of both the old Soviet economy and its transition to the new Russia. But to do so we must first dispense with a series of illusions. Think of a command economy with an initial endowment of physical and human capital. These assets are capable of producing either capitalist or socialist goods, measured along the vertical and horizontal axes respectively in figure 1. The difference between them is that capitalist goods add value at market prices; socialist goods do not add value but create employment, which is why a dictator may command them to be produced, so initially the economy’s assets are specialised in the production of socialist goods at point A.

Drawing Lines, Spanning Boundaries: Managerial Perceptions of Innovation Value in Public and Nonprofit Organizations

Despite the large and varied selection of literature on innovation, questions about the diverse organizational aspects of innovation and the differences of innovation in public and nonprofit organizations still remain. This study compares public and nonprofit organizations on their perceived innovativeness and analyzes the environmental factors and organizational practices that are presumably related to innovation. This paper uses survey data from the National Administrative Studies Project III (NASP-III) that surveyed managers in public and nonprofit organizations in Georgia and Illinois over a three wave, 10-month span, on a variety of organizational topics. Using multinomial logistic regression, the findings show that variables such as flexibility, the ability to serve the public interest, and incentives are positively related to innovation in both public and nonprofit organizations. Variables such as employee and managerial risk aversion, and red tape negatively affect innovation. Other variables, including job security, organizational pride and performance-based promotion vary by sector.LBJ School of Public Affair