Absorbing Technological Spillovers: Simulations in an Evolutionary Framework

This paper offers a simulation analysis of firm strategies whichdiffer by the degree of absorbing technical know-how generatedelsewhere. It investigates the success of those firm strategiesin a hetergeneous oligopoly setting in which firms compete byintroducing new products and processes. Simulation results showthat building up absorptive capacities tends to be a superiorstrategy in technologically heterogeneous environments. Reducingspillover effects leads to a slowdown of technological progressbecause cross-fertilization effects are of minor relevance.Where market competition is reduced the absorptive strategytends to be only technologically superior.