Endogenous growth in production networks. Mandel, A. paper-progress, 2016.
abstract   bibtex   
We investigate the interplay between technological change and macro- economic dynamics in an agent-based model of the formation of produc- tion networks. On the one hand, production networks form the structure that determines economic dynamics in the short run. On the other hand, their evolution reflects the long-term impacts of competition and innova- tion on the economy. We account for process innovation via increasing variety in the input mix and hence increasing connectivity in the net- work. In turn, product innovation induces a direct growth of the firm’s productivity and the potential destruction of links. The interplay between both processes generate complex technological dynamics in which phases of process and product innovation successively dominate. The model re- produces a wealth of stylized facts about industrial dynamics and tech- nological progress, in particular the persistence of heterogeneity among firms and Wright’s law for the growth of productivity within a technolog- ical paradigm. We illustrate the potential of the model for the analysis of industrial policy via a preliminary set of policy experiments in which we investigate the impact on innovators’ success of feed-in tariffs and of priority market access.
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 title = {Endogenous growth in production networks},
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 year = {2016},
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 abstract = {We investigate the interplay between technological change and macro- economic dynamics in an agent-based model of the formation of produc- tion networks. On the one hand, production networks form the structure that determines economic dynamics in the short run. On the other hand, their evolution reflects the long-term impacts of competition and innova- tion on the economy. We account for process innovation via increasing variety in the input mix and hence increasing connectivity in the net- work. In turn, product innovation induces a direct growth of the firm’s productivity and the potential destruction of links. The interplay between both processes generate complex technological dynamics in which phases of process and product innovation successively dominate. The model re- produces a wealth of stylized facts about industrial dynamics and tech- nological progress, in particular the persistence of heterogeneity among firms and Wright’s law for the growth of productivity within a technolog- ical paradigm. We illustrate the potential of the model for the analysis of industrial policy via a preliminary set of policy experiments in which we investigate the impact on innovators’ success of feed-in tariffs and of priority market access.},
 bibtype = {article},
 author = {Mandel, Antoine},
 journal = {paper-progress}
}
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