Blom, Martin and Castellacci, Fulvio and Fevolden, Arne (2012): Defence firms facing liberalization: innovation and export in an agent-based model of the defence industry.
Download (2MB) | Preview
The paper presents an agent-based simulation model of the defence industry. The model resembles some of the key characteristics of the European defence sector, and studies how firms in this market will respond to the challenges and opportunities provided by a higher degree of openness and liberalization in the future. The simulation analysis points out that European defence firms will progressively become more efficient, less dependent on public procurement and innovation policy support, and more prone to knowledge sharing and inter-firm collaborations. This firm-level dynamics will in the long-run lead to an increase in the industry’s export propensity and a less concentrated market.
|Item Type:||MPRA Paper|
|Original Title:||Defence firms facing liberalization: innovation and export in an agent-based model of the defence industry|
|Keywords:||Defence industry; liberalization; EU; export; innovation; agent-based simulation model|
|Subjects:||C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling
F - International Economics > F5 - International Relations, National Security, and International Political Economy
M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics
F - International Economics > F1 - Trade
O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
|Depositing User:||Fulvio Castellacci|
|Date Deposited:||03. Jan 2012 14:57|
|Last Modified:||12. Feb 2013 11:35|
Ahrweiler, P., N. Gilbert and A. Pyka (2011): “Agency and Structure. A social simulation of knowledge-intensive industries”, Computational and Mathematical Organization Theory, 17: 59-76.
Castellacci, F. (2011): “Technology, heterogeneity and international competitiveness: Insights from the mainstream and evolutionary economics paradigms”, in Jovanovic, M. (ed.), International Handbook of Economic Integration, Edward Elgar.
Castellacci, F. and Fevolden, A. (2011): “What explains the export performance of firms in the defence industry? Empirical evidence from Norway”, NUPI Working Paper, in press.
Dosi, G., Fagiolo, G. and Roventini, A. (2010): “Schumpeter Meeting Keynes: A Policy-Friendly Model of Endogenous Growth and Business Cycles”, Journal of Economics Dynamics and Control, 34: 1748–1767.
Edwards, J. (2011): “The EU Defence and Security Procurement Directive: A Step Towards Affordability?”, International Security Programme Paper 2011/05, Chatham House, London.
Frenken, K. (2006): “Technological innovation and complexity theory”, Economics of Innovation and New Technology, 15(2): 137-155.
Frenken, K. and Nuvolari, A. (2004): “The early development of the steam engine: an evolutionary interpretation using complexity theory”, Industrial and Corporate Change, 13(2): 419-450.
Gilbert, N., Ahrweiler, P. and Pyka, A. (2007): “Learning in innovation networks: Some simulation experiments”, Physica A, 378: 100-109.
Guay, T. and Callum, R. (2002): “The transformation and future prospects of Europe’s defence industry”, International Affairs, 78 (4): 757–776.
Helpman, H., Melitz, M. and Yeaple, S. (2004): “Export versus FDI with heterogeneous firms”, American Economic Review, 94 (1): 300-316.
Klepper, S. (1996): “Entry, Exit, Growth, and Innovation over the Product Life Cycle”, American Economic Review, 86 (3): 562-583.
Lichtenberg, F. R. (1995): “Economics of defense R&D”, in K. Hartley and T. Sandler (Eds.), Handbook of Defense Economics, Volume 1, Elseveier.
Macal, C. and North, M. (2010): “Tutorial on agent-based modelling and simulation”, Journal of Simulation, 4: 151-162.
Malerba, F. and F. Montobbio (2003): “Exploring factors affecting international technological specialization: the role of knowledge flows and the structure of innovative activity”, Journal of Evolutionary Economics, 13: 411-434.
Malerba, F., Orsenigo, L. (1996): “Schumpeterian patterns of innovation are technology-specific”, Research Policy, 25: 451-478.
Markowski, S., Hall, P. and Wykie, R. (2010): Defence Procurement and Industry Policy: A Small Country Perspective, Routledge, London.
Melitz, M. (2003): “The impact of trade and intra-industry reallocations and aggregate industry productivity”, Econometrica, 71 (6): 1695-1725.
Mowery, D. (2010): “Military R&D and innovation”, in B. Hall and N. Rosenberg (Eds.), Handbook of the Economics of Innovation, Elsevier.
Nelson, R.R. and S.G. Winter (1982): An Evolutionary Theory of Economic Change, The Belknap Press of Harvard University Press, Cambridge, USA.
North, M. and Macal, C. (2007): Managing Business Complexity: Discovering Strategic Solutions with Agent-based Modelling and Simulation, Oxford University Press.
Pavitt, K. (1984), “Sectoral patterns of technical change: towards a taxonomy and a theory”, Research Policy, 13: 343-373.
Pyka, A., Gilbert, N. and Ahrweiler, P. (2007): “Simulating knowledge-generation and distribution processes in innovation collaborations and networks”, Cybernetics and Systems, 38 (7): 667-693.
Tesfatsion, L. (2002): “Agent-based computational economics: Growing economies from the bottom up”, Artificial Life, 8 (1): 55-82.