Formal Modeling of Innovative Competition in a Production System — an Evolutionary Approach

Abstract

AbstractRelationships between innovations and competition are the main bases of an evolutionary approach to economic development. Innovation is recognized as a major force to achieve success in an intensively competitive environment, and competition is an essential element of the coordination mechanism required for economic changes to be successfully brought about. One of the first who well explore these relationships was Schumpeter. The idea that innovative competition may improve the positions of some groups of economic agents involved in the evolutionary processes is rooted within the neo-Schumpeterian research program. It suggests that the price mechanism typical for the routine behavior of agents should be replaced by a qualitative one to take into account the structural changes of an economy based on innovative and competitive processes as drivers of economic evolution. In this context, the main aim of this paper is to give a new setting of the phenomenon of innovative competition. This problem relates to the classification of different kinds of innovations and diversification among innovators. Moreover, two major concepts of competition are studied: the classical concept in which competition is viewed as a dynamic process and the neoclassical one in which competition is an end state of the evolutionary processes.