Diversification in Production : A Discrete Evolutionary Model

In this article, within the framework of the General Equilibrium Theory, we present a model of evolutionary economy, with I consumers and N companies located in M different interrelated productive markets, in which the production decisions of the managers of the firms are the engine of the transformation of the economy. Unlike previous works of the topic, we consider the possibility of diversification, introducing the possibility that each firm produces more than one good at the same time and we consider the possibility of diversifying production over time. In other words, the managers of firms initially located in some of the markets, depending on the available technology, can modify the percentages of their productive capacity in order to participate in some other markets. We understand diversification as a reversible process, whose objective is to increase the profits of the firm.In order to analyze the main consequences of diversification, we introduce the dynamics of the discrete replicator and we show that these decisions can give rise to important changes in the behavior of the economy and in the well-being of consumers