A History-Friendly Model of the Internet Access Market: The Case of Brazil

Marcelo Carvalho Pereira () and David Dequech
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Marcelo Carvalho Pereira: University of Campinas

A chapter in The Evolution of Economic and Innovation Systems, 2015, pp 579-610 from Springer

Abstract: Abstract This paper presents a simulation model of the internet access services market. The model is based on neo-Schumpeterian evolutionary theory, as well as on the contemporary institutional theory. One key driver of the internet sector has been the significant technological opportunities. However, competition in the internet access services market has proved less intense than in other technology-driven industries in most countries, including other segments of the internet sector itself. Usual theoretical approaches do not adequately explain this empirical observation. Our hypothesis is that institutional mechanisms were determinant for the dynamics of competition. Institutions are broadly understood as socially shared, formal or informal, recurring rules of behaviour or thought. To test this hypothesis, a sectoral agent-based simulation model is proposed, modelling with some detail both demand and supply agents’ behaviours. Model parameters and initial conditions were calibrated using empirical data from the Brazilian market. The competitive mechanisms unveiled by simulation were clearly dependent on institutional processes, particularly at user preferences setting and informal business rules adoption. Institutional phenomena were strong enough to produce results that are significantly different from other technologically dynamic industries.

Keywords: Market Share; Stylize Fact; Network Externality; Radical Innovation; Market Concentration (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eccchp:978-3-319-13299-0_22

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DOI: 10.1007/978-3-319-13299-0_22

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