The Market Structure Simulation of Heterogenous Firms

Arūnas Burinskas and Manuela Tvaronavičienė
Additional contact information
Arūnas Burinskas: Department of Business Technologies and Entrepreneurship, Vilnius Gediminas Technical University, Saulėtekio Av. 11, LT-10223 Vilnius, Lithuania
Manuela Tvaronavičienė: Department of Business Technologies and Entrepreneurship, Vilnius Gediminas Technical University, Saulėtekio Av. 11, LT-10223 Vilnius, Lithuania

Economies, 2021, vol. 10, issue 1, 1-22

Abstract: The paper aims at the need for economic policy evaluators to assess how and whether specific measures can influence the development of markets in a way that achieves greater wealth. Therefore, this study concentrates on well-documented firms’ heterogeneity that significantly impact their ability to compete, influence the market structure, and decide to participate in trade. For the initial attributes and features of the simulated model, we chose Ottaviano demand function. However, we took a different approach regarding demand and its elasticities in the market by employing distributional functions to model the market demand and the demand for each firm’s product. Allowing for the evolution of the market structure, the model reveals the importance of endowment factors and suggests the crucial role of firms’ abilities to compete. What is more important—it affects the time needed for the market structure formation. Although the model does not track all the aspects of a firm’s heterogeneity, it might guide economic policy makers to not only support the business in increasing its capabilities but keep it struggling over the competition to impede the collecting of Ricardian rents.

Keywords: dynamic efficiency; market structure; model simulation; heterogeneous firms (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7099/10/1/9/pdf (application/pdf)
https://www.mdpi.com/2227-7099/10/1/9/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:10:y:2021:i:1:p:9-:d:712795

Access Statistics for this article

Economies is currently edited by Ms. Hongyan Zhang

More articles in Economies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().