Sources of concentration and turbulence in evolutionary environments : simulations of learning and selection

This paper updates previous work on an evolutionary model of industrial competition and offers a link between formal and empirical studies of the relationship between technological change and industrial competition. It argues, using a simple formal representation of technological learning and market selection, it is possible to explain some of the variety of findings in the literature on industrial competition and technological change. The model shows that technological opportunities and technological entry-barriers play an important role in shaping patterns of industrial competition. Using repeated simulations, the model demonstrates that there is a non-linear relationship between market selection, technological learning and industrial dynamics. The analysis suggests that market concentration is largely dependent on the cumulative effects of past successes and random events, but market turbulence is dependent on the nature of technology. The paper explores some of the implications for modelling and empirical research from this simulation exercise