Description

Inter-firm network links are primary intangible assets for innovating firms. We consider a vertically disintegrated industry in which some or all of the innovations are invented by third-party independent R\&D labs, who then sell them to firms in the industry; the model is set up as a static game. Cognitivist theories on innovation, however, recommend that models incorporate a notion of strategy that fits a complex foresight horizon for decision making. We do so by applying evolutionary dynamics to all dimensions of the static network game. This yields a dynamic model in which business link patterns evolve by trial-and-error and the long-run equilibrium is Pareto efficient.

(with Giovanni Ponti)