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Endogenous growth in production networks

  • Stanislao Gualdi
  • Antoine Mandel
Regular Article

Abstract

We investigate the interplay between technological change and macro- economic dynamics in an agent-based model of the formation of production 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 innovation on the economy. We account for process innovation via increasing variety in the input mix and hence increasing connectivity in the network. In turn, product innovation induces a direct growth of the firm’s productivity and the potential destruction of links. The interplay between both processes generates complex technological dynamics in which phases of process and product innovation successively dominate. The model reproduces a wealth of stylized facts about industrial dynamics and technological progress, in particular the persistence of heterogeneity among firms and Wright’s law for the growth of productivity within a technological 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.

Keywords

Agent-based modeling production networks Endogenous technological change 

JEL Classification

C63 D57 D85 L16 L52 O31 O33 

Notes

Funding

This study was funded by the European Commission through the FP7 project IMPRESSIONS (603416) and the H2020 project Dolfins (640772), and through the Agence Nationale de la Recherche via Labex Louis Bachelier (ANR 11-LABX-0019) and Labex OSE (ANR-10-LABX-93-01).

Compliance with Ethical Standards

Conflict of interests

the authors declare that they have no conflict of interest.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.CentraleSupélecChâtenay-MalabryFrance
  2. 2.Paris School of EconomicsUniversité Paris I Panthéon-SorbonneParisFrance

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