How fast to run in the Red Queen race?

Matthew Oldham

Intelligent Systems in Accounting, Finance and Management, 2018, vol. 25, issue 1, 28-43

Abstract: This paper creates a market ecosystem, via an agent‐based model, that combines the dynamic features of the Red Queen effect with well‐accepted business world performance indicators. Essentially, firms are tasked with remaining ‘alive’ by adapting to their environment through implementing a competitive response of innovating or imitating. An analysis of the firms’ behaviours delivers a deep understanding of the drivers of innovative behaviour within the economy. The key findings of the paper are (1) that concentrated markets are not entirely detrimental to innovative behaviour, with the blend of firm type being a more important consideration, and (2) that the rate at which an innovation impairs existing markets affects the activity levels of the firms within the population. The model's results are validated against a matching study based on real‐world data.

Date: 2018
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