Ansätze einer akteurbasierten Innovationserklärung ... - KOBRA

financial performance of the firm. In particular, we introduce the following features in our
modelling framework:
for each product, there exists a linear return and a linear cost function which depend
on demand as described by the difference equations above;
there is an additional cost component associated with innovation projects (this is a
model parameter that can be varied);
profit is turnover originating from sales of innovative and conventional products (depending
on the return function) minus variable and fixed cost.
Financial resources are updated according to profits (losses) of the current period. The financial
performance of the firm can finally give rise to another reason a product disappears from
the market. It is assumed that a firm stops producing a certain product once the revenues of
a product no longer cover production costs. This happens when the demand for such a conventional
product diminishes, especially by the substitution mechanism mentioned above.
The entry of new firm agents is modelled probabilistically: In each time step and for each
production sector, a new firm agent is created with a probability that depends linearly on the
sector‐specific indicator of competition intensity and on the amount of public subsidies for
new entrants. Whereas the indicator of the competition intensity is subject to an exogenous
linear dynamic, the amount of public subsidies is a model parameter. An entrant firm does
not sell any conventional products; it always starts with an attempt to create an innovative
product (either individually or cooperatively). The behavioral type of an entrant firm agent is
set probabilistically as well; the probability distribution corresponds to the shares of the behavioral
types given at the beginning of the simulation when the initial firm agent population
was created.
If the financial resources of a firm agent fall beyond zero (meaning the agent runs into debt),
the agent exits the market. This can happen in the course of an innovation or imitation project
if the actual profit (gained by conventional products and innovative products that already
have been put on the market before) falls behind the expected profit (which the agent
calculates on the basis of the profit in the previous time steps), or if the actual development
duration and, consequently, the actual development costs exceed the expected duration or
costs, respectively.
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