nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2006‒08‒12
three papers chosen by
Matthew Baker
US Naval Academy, USA

  1. An evolutionary model of firms' institutional behavior focusing on labor decisions By Sandra Tavares Silva; Aurora A.C. Teixeira
  2. The evolution of the Dutch dairy industry and the rise of cooperatives: Combining transaction cost and evolutionary approaches By Koen Frenken; Gerben van der Steege
  3. Genetic, Cultural and Geographical Distances By Paola Giuliano; Antonio Spilimbergo; Giovanni Tonon

  1. By: Sandra Tavares Silva (CEMPRE, Faculdade de Economia do Porto, Universidade do Porto); Aurora A.C. Teixeira (CEMPRE, Faculdade de Economia do Porto, Universidade do Porto)
    Abstract: The understanding of the economy's aggregate growth patterns is a fundamental objective of economic growth theorizing. However, the micro constructions are strongly linked to economic growth and so cannot be neglected in such process. This paper is concerned with this problem, proposing a formal mechanism to establish the bridge between macro regularities and micro evolutionary behavior. Within a micro to macro or bottom-up perspective, the adopted approach is focused in the influence of firms’ ‘institutional settings’ on economic growth and in the industry dynamics that lies behind more aggregate behaviors. The analysis associates such settings to firms’ labor choices in terms of hiring/firing policies and to their screening capabilities. Building a computer simulation model which deals with the nature and evolution of the knowledge that guides firms’ efforts to improve their institutional settings, we were able to draw some important implications. The results show that firm’s ability to change its ‘institutional setting’ is crucial for its survival. In a model without a learning mechanism the results show significant turbulence in terms of exit and entry of firms and no significant connection with the firm’s ‘institutional set’. In the LearnModel, the outcome is much more stable, with initial firms surviving for long period of time. Results also suggest that the presence of a learning mechanism is particularly striking in what concerns firms’ behavior and industry’s dynamics. The survival probability depends on firms’ hiring efficiency and on their ability to react to environmental changes. Since firms’ hiring efficiency and their learning rates depend on their accumulated non-routine workers, the results seem to imply some ‘lock-in’ paths. Firms with initial low values of relative non-routine workers have lower chances of survival. However, firms with initial high values of relative non-routine workers will survive if and only if they rapidly improve their hiring efficiency.
    Keywords: evolutionary, industrial dynamics, learning, labor decisions
    JEL: D21 D83 L22 M51
    Date: 2006–08
  2. By: Koen Frenken; Gerben van der Steege
    Abstract: The thesis advanced in this paper holds that any transaction cost explanation of the diffusion of a particular organizational form requires an evolutionary analysis of differential performance of competing organizational forms over time. Using data on 1141 dairy factories in The Netherlands, we find evidence that cooperative factories performed significantly better than private factories, which can be explained by cooperatives’ lower transaction costs. However, superior performance is observed only in the Northern part, while cooperatives were more dominant in the Southern part. This suggests that entry conditions for cooperative factories in the South were more favourable than in the North.
    Keywords: transaction cost economics, survival analysis, industry lifecycle, dairy industry, cooperatives
    Date: 2006–07
  3. By: Paola Giuliano (International Monetary Fund and IZA Bonn); Antonio Spilimbergo (International Monetary Fund, CEPR and WDI); Giovanni Tonon (DFCI, Harvard University)
    Abstract: This paper investigates how the measures of genetic distance between populations, which have been used in anthropology and historical linguistics, can be used in economics. What does the correlation between genetic distance and economic variables mean? Using the measure of genetic distance, a newly-collected database on transport costs, as well as more refined measures of geography within Europe, we show that i) geography explains both genetic distance and transportation costs between European countries, and ii) genetic distance does not explain economic outcomes once we control for geography. We conclude that genetic distance in economics capture transportation costs between countries and not cultural differences.
    Keywords: transport costs, genetics, trade, geography
    JEL: Z10 F10
    Date: 2006–07

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