Competition in a New Industrial Economy: Toward an Agent-Based Economic Model of Modularity

Bin-Tzong Chie and Shu-Heng Chen
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Bin-Tzong Chie: Department of Industrial Economics, Tamkang University, Tamshui, New Taipei City 251, Taiwan

Administrative Sciences, 2014, vol. 4, issue 3, 1-27

Abstract: When firms (conglomerates) are competing, not only for the present, with a given population of customers and a fixed set of commodities or service, but also for the future, in which products are constantly evolving, what will be their competitive strategies and what will be the emerging ecology of the market? In this paper, we use the agent-based modeling of a modular economy to study the markup rate dynamics in a duopolistic setting. We find that there are multiple equilibria in the market, characterized by either a fixed point or a limit cycle. In the former case, both firms compete with the same markup rate, which is a situation similar to the familiar classic Bertrand model, except that the rate is not necessarily zero. In the latter case, both firms survive by maintaining different markup rates and different market shares.

Keywords: modularity; modular economy; genetic programming; hierarchy; markups (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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