Absorbing Technological Spillovers: Simulations in an Evolutionary Framework.

This paper offers a simulation analysis of firm strategies which differ by the degree of absorbing technical know-how generated elsewhere. It investigates the success of those firm strategies in a heterogeneous oligopoly setting in which firms compete by introducing new products and processes. Simulation results show that building up absorptive capacities tends to be a superior strategy in technologically heterogeneous environments. Reducing spillover effects leads to a slowdown of technological progress because cross-fertilization effects are of minor relevance. Where markets competition is reduced, the absorptive strategy tends to be only technologically superior. Copyright 1998 by Oxford University Press.