Gaining the competitive edge using internal and external spillovers: a dynamic analysis

✍ Scribed by G.-I. Bischi; H. Dawid; M. Kopel

• Publisher: Elsevier Science
• Year: 2003
• Tongue: English
• Weight: 497 KB
• Volume: 27
• Category: Article
• ISSN: 0165-1889
• DOI: 10.1016/s0165-1889(02)00120-3

✦ Synopsis

This paper studies the evolution of two clusters of ÿrms competing on a common market. Firms exit and enter a cluster based on the perceived chances for proÿts inside and outside the cluster. Information about proÿts are di used by direct communication between ÿrms. Internal and external spillover e ects reduce the overall costs of ÿrms in the clusters depending on the number of ÿrms in the own and the competing cluster. A discrete time deterministic dynamical system describing the evolution of cluster sizes is derived. An analysis of the long run attractors of the system and their basins of attraction is used to compare the e ects of advantages of a cluster with respect to the size of internal and external spillover e ects, respectively. Furthermore, the implications of slow and fast exit and entry behavior of ÿrms for the long run survival and the size of the clusters are studied.