Gaining the competitive edge using internal and external spillovers: a dynamic analysis
Gian Italo Bischi (),
H. Dawid and
Michael Kopel ()
Journal of Economic Dynamics and Control, 2003, vol. 27, issue 11, 2171-2193
This paper studies the evolution of two clusters of firms competing on a common market. Firms exit and enter a cluster based on the perceived chances for profits inside and outside the cluster. Information about profits are diffused by direct communication between firms. Internal and external spillover effects reduce the overall costs of firms in the clusters depending on the number of firms in the own and the competing cluster. A discrete time deterministic dynamical system describing the evolution of cluster sizes is derived. An analysis of the long run attractors of the system and their basins of attraction is used to compare the effects of advantages of a cluster with respect to the size of internal and external spillover effects, respectively. Furthermore, the implications of slow and fast exit and entry behavior of firms for the long run survival and the size of the clusters are studied.
Keywords: Spillover effects; Evolutionary dynamics; Equilibrium selection; Basins of attraction; Critical curves (search for similar items in EconPapers)
JEL-codes: D62 D83 L52 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Journal Article: Gaining the competitive edge using internal and external spillovers: a dynamic analysis (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:27:y:2003:i:11:p:2171-2193
Access Statistics for this article
Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok
More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().