An Evolutionary Model of Growth in a Two Region Economy.

A microsimulation model of a two region economy is introduced. The model incorporates behavioral aspects of firms' decision-making processes in defining time paths for output and other economic aggregates. Simulations begin from a situation where one region has superior technological efficiency to the other, and attempt to define circumstances under which regional convergence and divergence occur. Results indicate that both satisficing behavior by firms and interregional transfer of technological information promote convergence in regional growth rates, wages and rates of return.