To innovate or not to innovate

Bullnheimer, Bernd and Dawid, Herbert and Reimann, Marc (2000) To innovate or not to innovate. Working Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science", 68. SFB Adaptive Information Systems and Modelling in Economics and Management Science, WU Vienna University of Economics and Business, Vienna.


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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.

Item Type: Paper
Keywords: Produktinnovation / Produktion / Optimierung / Simulation
Divisions: Departments > Finance, Accounting and Statistics > Statistics and Mathematics
Departments > Informationsverarbeitung u Prozessmanag. > Informationswirtschaft
Departments > Informationsverarbeitung u Prozessmanag. > Produktionsmanagement > Taudes
Departments > Marketing > Service Marketing und Tourismus
Depositing User: Repository Administrator
Date Deposited: 30 Jan 2002 10:06
Last Modified: 22 Oct 2019 00:40


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