Evolutionary Economics

This chapter deals with the family of theories that use the metaphor of natural selection for free-market economy stipulated by neo-classic theory. Here, the inherent logic of technological change is illustrated by genetic variation whereas the mechanisms of decision made on a market as well as the institutions surrounding it correspond to the selection pressure exercised by the environment in natural selection. Change is thus generated by endogenous factors, and the evolutionary process takes place due to learning and imitation rather than replication. Another important consequence is that the focus of analyses is set on processes and institutions on the supply side rather than on the demand side, which is often the case in analyses of market dynamics.