• Home
  • Textbooks
  • The Microeconomics of Complex Economies. Evolutionary, Institutional, and Complexity Perspectives
  • Approaching Real-World Interdependence and Complexity: Empirical Phenomena in the Global Economy

The Microeconomics of Complex Economies. Evolutionary, Institutional, and Complexity Perspectives

Wolfram Elsner, Henning Schwardt, Torsten Heinrich

Chapter 4

Approaching Real-World Interdependence and Complexity: Empirical Phenomena in the Global Economy - all with Video Answers

Educators


Chapter Questions

Problem 1

What have you learned so far?
Reconsider the following key conceptions from Chapters 1-3:

Check back soon!

Problem 2

New Properties of the Economy: Complex Products, Fragmented Value Chains, and Network Technologies
a. Explain the coordination problems (i) in the fragmented VAC and (ii) in technology choice among competing (noninteroperable) network technologies.
b. Explain the potential social dilemmas additionally implied (i) in the innovation process in the fragmented VAC and (ii) in technology choice between noninteroperable network technologies. Explain a potential mutual blockage of (Pareto-superior) action under conditions of a social dilemma in technology choice. Also explain potential regret in technology choice.
c. Explain potential inappropriability in the VAC and the system of both providing and receiving positive externalities.
d. Explain how interoperable network technologies may contribute to solving the coordination and dilemma problems for fragmented agents in the VAC, and to producing highly integrated complex products through a fragmented VAC.

Check back soon!
01:10

Problem 3

Technology Choice: Relative Number of Choices and Related Payoffs (1)
Assume the following numerical payoff functions for technologies $T_1$ and $T_2$, depending on the number of agents $i=1, \ldots$, $n$ having chosen the respective technology:
$$
\begin{array}{lll}
\hline \begin{array}{l}
\text { Number } n \text { of } \\
\text { Agents } I \text { Choosing } \\
\text { Respective } \\
\text { Technology }
\end{array} & \begin{array}{l}
\text { Payoff for Each } \\
\text { Agent if } n-
\end{array} & \begin{array}{l}
\text { Payoff for Each } \\
\text { Agents Have } \\
\text { Chosent } T_1
\end{array}
\end{array}
$$
$T_{1,2}$ and $n$, in particular depending on the following choice sequences given (indicated by $X$ ), after all agents have chosen (fill in the bottom right cells in the format: $P_A, P_B, P_C$ ):
$$
\begin{array}{llll}
\hline \text { Agent } & T_1 & T_2 & P\left(T_{1,2}, n\right) \\
\hline A & \mathrm{X} & & -/ . \\
B & \mathrm{X} & & -/ . \\
C & & \mathrm{X} & \\
\hline \text { Agent } & T_1 & T_2 & P\left(T_{1,2}, n\right) \\
\hline A & \mathrm{X} & & . / \\
B & & \mathrm{X} & . / \\
C & & \mathrm{X} & \\
\hline
\end{array}
$$
You may determine the other six possibilities of choice sequences on your own.

Tyler Moulton
Tyler Moulton
Numerade Educator

Problem 4

Technology Choice: Relative Numbers of Choices and Related Payoffs (2)

Further consider an indefinite series of agents with random technology choices. Determine their changing payoffs, depending on the choices made by each following agent, given the following numerical payoff functions:
$$
\begin{array}{|c|c|c|}
\hline \begin{array}{l}
\text { Number } n \text { of } \\
\text { Agents } I \\
\text { Choosing } \\
\text { Respective } \\
\text { Technology }
\end{array} & \begin{array}{l}
\text { Payoff for Each } \\
\text { Agent if } n^{-} \\
\text {Agents Have } \\
\text { Chosen } T_1 \\
{\left[P_{T 1}(n)\right]}
\end{array} & \begin{array}{l}
\text { Payoff of Each } \\
\text { Agent if } n- \\
\text { Agents Have } \\
\text { Chosen } T_2 \\
{\left[P_{T 2}(n)\right]}
\end{array} \\
\hline 1 & 2 & 1 \\
\hline 2 & 3 & 2 \\
\hline 3 & 4 & 3 \\
\hline 4 & 5 & 4 \\
\hline 5 & 6 & 5 \\
\hline 6 & 7 & 6 \\
\hline 7 & 8 & 7 \\
\hline \ldots & \ldots & \ldots \\
\hline
\end{array}
$$
See the following example of some sequence:
$$
\begin{array}{llll}
\hline \text { Agent No. } & T_1 & T_2 & \Pi\left(T_{1,2} n\right) \\
\hline 1 & X & & 2 \\
2 & & X & 2,1 \\
3 & & X & 2,2,2 \\
4 & X & & 3,2,2,3 \\
5 & X & & 4,2,2,4,4 \\
6 & X & & 5,2,2,5,5,5 \\
7 & & X & 5,3,3,5,5,5,3 \\
\ldots & \ldots & \ldots & \ldots \\
\hline
\end{array}
$$
Build different choice sequences among up to 10 choosing agents in a row, and determine the different results for each. In particular, give an example for a choice sequence that yields a higher payoff for those who have chosen the inferior technology $T_2$.

Check back soon!

Problem 5

New Empirical Phenomena to Cope with Increased Complexity
a. Explain why and how firms in the global corporate economy tend to organize (or being organized) in
- spatial industrial clusters,
- industrial networks,
- hub\&spoke networks.
b. Explain why OS-type networks may be considered superior in collectively governing/managing information and expectations (trust), and to accelerate information and innovation flows. Consider the single-shot solution to explain institutionalized information exchange and knowledge sharing in OS-type networks.

Check back soon!