The R&D stochastic component within the ‘sailing-ship effect’

Giovanni Filatrella and Nicola De Liso

Economics of Innovation and New Technology, 2021, vol. 30, issue 7, 731-749

Abstract: In this work, we apply a stochastic component to a previously proposed deterministic model which expounds the ‘sailing-ship effect’ – that is, the reaction of an existing technology to the appearance of a new, potentially better, technology. The evolution of the technical performance – e.g. data transmission capacity – is studied taking into account the noise engendered by the presence of a random variable that mimics the uncertainty of R&D productivity. Both a Gaussian and a Cauchy–Lorentz distribution are considered. Performances’ evolution is studied by running simulations of a nonlinear functional map which is capable of showing the sailing-ship effect in the two possible variants, i.e. either the old or the new technology prevails in terms of performance. A noteworthy counterintuitive result for the Gaussian case is that noise may actually be beneficial to performance improvement.

Date: 2021
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DOI: 10.1080/10438599.2020.1772707

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