Identifying Rivals Among Clustered and Isolated Firms: An Empirical Investigation and a Computational Model

Abstract

We carried out an empirical investigation among producers of packaging machines collecting information about their rivals, i.e., those few competitors which they closely monitor. We found interesting regularities that take geographically clustered firms apart from isolated firms, but we could not explain our empirical findings by means of existing theories. By constructing an agent-based model we were able to formulate a simple and plausible mechanism for rival selection which, once combined with well-known aspects of knowledge representation among clustered and isolated firms, is able to generate the empirically observed facts. We submit that this case is exemplary in showing what agent-based models can do, namely, providing sufficiency proofs that help theory-building.

Keywords: Inter-Firm Rivalry, Industrial Clusters, Packaging Machines, Agent-Based Models, Theory Building, Sufficiency Proofs

JEL Classification: B49, B59, C69, D22, L29, L64, R19