Schumpeterian competition, technological regimes and learning through knowledge spillover

This paper builds upon Winter (1984) in which the author discusses two views of Schumpeter on competition. Specifically, technological regimes and the role of knowledge spillovers for innovation are examined. An agent-based simulation model is formulated which captures the relevant aspect of competition between firms in an innovative industry. Results of the simulation runs indicate that at first, the technological development in terms of process and product innovations is better in an industry that is characterized by Schumpeter Mark II conditions. But the improved technological development is connected with higher prices and profits, which could be interpreted as a trade-off between static and dynamic efficiency. Second, in both scenarios market and industry concentration rises over time, showing a strong separation between successful firms and those lagging behind in technological terms. And third, surprisingly firms in a Schumpeter Mark I regime seem to be more technologically specialized. Furthermore, this article proves that a replication of simulation models is possible and useful. (C) 2010 Elsevier B.V. All rights reserved.