2005 | OriginalPaper | Chapter
Firms Interaction and Technological Paradigms
Authors : Rainer Andergassen, Franco Nardini, Massimo Ricottilli
Published in: New Tools of Economic Dynamics
Publisher: Springer Berlin Heidelberg
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This paper deals with the aggregate effects of small, exogenous but idiosyncratic technological shocks on locally interacting firms. Its main purpose is to model a situation in which technological paradigms emerge through endogenous propagation and diffusion of information leading to an aggregate pattern. We develop a theoretical framework in which large technological correlations emerge due to localised interaction of single firms. The paper states some simple results on spill-over dynamics determined by firms trying to improve their current technology and thus generating new information through investment in R&D and through localised technological search. The first part shows that different growth regimes can arise from the general framework of interaction that we propose. The second part shows that an interesting regime characterised both by long run innovation growth and endogenous short run fluctuations emerges spontaneously.