We employ a dynamic market model with endogenous creation of submarkets to study the optimal product innovation strategies of incumbent firms. Firms invest in production capacity and R&D knowledge stock, where the latter determines the hazard rate of innovation. We find that under Markov Perfect...

This paper analyzes how the transferability of production capacities from an established to a new product influences the incentives of a firm to invest in R&D. A dynamic duopoly model is considered, where initially both firms offer a homogeneous product. The firms invest in production capacities...

We study in a dynamic framework how product innovation activities of a firm are influenced by its production capacity investments for an established product and vice versa. The firm initially has capacity to sell an established product, and it also has the option to undertake an R&D project,...

We examine the profitability of different R&D location strategies of firms in a dynamic industry model. Firms engage in imitative and innovative activities in order to improve their products' quality, which determines their competitiveness. When choosing the set of locations in which to operate...

This chapter surveys work dedicated to macroeconomic analysis using an agent-based modeling approach. After a short review of the origins and general characteristics of this approach a systemic comparison of the structure and modeling assumptions of a set of important (families of) agent-based...

This paper addresses the role of product liability for the emergence and development of smart products such as autonomous vehicles (AVs). We analyze how the liability regime affects innovative activities, as well as the timing of market introduction and market penetration of such smart products....

In this paper, we employ the agent-based macroeconomic Eurace@Unibi Model to study the economic implications of different degrees of de-centralization in the wage setting. Starting from a baseline scenario, corresponding to a high degree of unionization, in which wages are fully centralized and...

We study optimal promotion decisions of hierarchical firms, with one junior and one senior managerial position, which interact in a search and matching labor market. Workers acquire experience over time while being employed in a junior position and the firm has to determine the experience level...

In the aftermath of the financial crisis, with periphery countries in the European Union even more falling behind the core countries economically, there have been quests for various kind of fiscal policies in order to revert divergence. How these policies would unfold and perform comparatively...

Agent-based simulation models are a relatively new addition to the tool-box of macroeconomists. In this chapter we introduce the Eurace@Unibi model and the research that has been done within this framework. We show how an agent-based model can be used to identify economic mechanisms and how it...