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FIRM AND INDUSTRY RESPONSE TO CHANGED MARKET CONDITIONS: AN EVOLUTIONARY APPROACH
Author(s) -
NELSON RICHARD R.,
WINTER SIDNEY G.
Publication year - 1980
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1980.tb00569.x
Subject(s) - evolutionary theory , economics , profit (economics) , microeconomics , perfect competition , evolutionary economics , mathematical economics , selection (genetic algorithm) , neoclassical economics , computer science , philosophy , epistemology , artificial intelligence
This paper describes an evolutionary theory of the response of firms in a competitive industry to changed market conditions. Search and selection replace the more orthodox assumptions of profit maximizing and zero profit long run equilibrium. The particular assumptions needed to assure that the direction of response of such an evolutionary system is the same as that predicted by more orthodox theory are explored. While an evolutionary theory and a more orthodox one yield many of the same positive qualitative predictions, they differ sharply in a number of other respects, and these are considered in detail.