Economic geography in an era of global competition poses a paradox. In theory, location should no longer be a source of competitive advantage. Open global markets, rapid transportation, and high-speed communications should allow any company to source any thing from any place at any time. But in practice, Michael Porter demonstrates, location remains central to competition. Today's economic map of the world is characterized by what Porter calls clusters: critical masses in one place of linked industries and institutions--from suppliers to universities to government agencies--that enjoy unusual competitive success in a particular field. The most famous example are found in Silicon Valley and Hollywood, but clusters dot the world's landscape. Porter explains how clusters affect competition in three broad ways: first, by increasing the productivity of companies based in the area; second, by driving the direction and pace of innovation; and third, by stimulating the formation of new businesses within the cluster. Geographic, cultural, and institutional proximity provides companies with special access, closer relationships, better information, powerful incentives, and other advantages that are difficult to tap from a distance. The more complex, knowledge-based, and dynamic the world economy becomes, the more this is true. Competitive advantage lies increasingly in local things--knowledge, relationships, and motivation--that distant rivals cannot replicate. Porter challenges the conventional wisdom about how companies should be configured, how institutions such as universities can contribute to competitive success, and how governments can promote economic development and prosperity.
Rare until recently, field-experimental studies of interspecific competition now number well over 150. Competition was found in 90% of the studies and 76% of their species, indicating its pervasive importance in ecological systems. Exploitative competition and interference competition were apparent mechanisms about equally often. Few experiments showed year-to-year variation in the existence of competition, though more did in its intensity; many were not long-term. The Hairston-Slobodkin-Smith hypothesis concerning variation in the importance of competition between trophic levels was strongly supported for terrestrial and freshwater systems. In particular, producers, and granivores, nectarivores, carnivores, and scavengers taken together, showed more competition than did phytophagous herbivores and filter feeders. In marine systems, virtually no trend was detectable one way or the other. Large heterotrophs competed more than small ones in most comparisons, and other properties possibly deterring predation, such as stinging behavior, seemed also characteristic of species competing frequently. Among terrestrial plants and certain terrestrial animals but not all, experiments carried out in enclosures were more likely to show competition than unenclosed experiments. A greater ecological overlap implied a greater tendency to compete, as determined experimentally, when niche dimensions were food type or microhabitat; the opposite was true for macrohabitat. A substantial number of studies showed asymmetry in their species' response to competition; larger species were significantly more often superior than smaller ones, though a variety of other apparent reasons for asymmetry also existed. The integration of competition theory into field experimentation has only just begun.
A new theory of competition is evolving in the strategy literature. The authors explicate the foundations of this new theory, the “comparative advantage theory of competition,” and contrast them with the neoclassical theory of perfect competition. They argue that the new theory of competition explains key macro and micro phenomena better than neoclassical perfect competition theory. Finally, they further explicate the theory of comparative advantage by evaluating a market orientation as a potential resource for comparative advantage.
Kirzner, writing from a neo-Austrian economic perspective that is inherently dynamic with an emphasis on over time, offers a critique of the prevailing positivistic, value freedom of orthodox microeconomics and price theory, focusing on what he believes is its unrealistic emphasis on static equilibrium analysis. Kirzner criticizes the methodology of Robbinsian equililbrium analysis in which a competitive market is a situation in which buyers and sellers have perfect knowledge and in which decision-making is mechanical and its solutions given. This analysis, according to Kirzner, eliminates all consideration of the competitive process and of entrepreneurship (which is synonymous, for him, with competitive activity); the assumption of perfect knowledge is unrealistic. He offers a full elaboration of the Mises-Hayek view of entrepreneurship and competition as a process based on von Mises' idea of human action rather than Marshall's idea of economizing. Kirzner sees the entrepreneur as always alert to information and propelling the system forward by seeking out price discrepancies as opportunities for profit. This process depends not on impulses from technology or genius; rather every market participant is a potential entrepreneur who can exploit a situation, which depends on a lack of perfect knowledge among the market participants. Entrepreneurial activity is always competitive; and competitive activity is always entrepreneurial. Kirzner is thus also a critique of the Schumpeterian view of entrepreneurship as disrupter of equilibrium; rather the entrepreneur removes disequilibrium in a short-run movement to an equilibrium position. A Kirznerian entrepreneur is a decision-maker whose entire role arises from alertness to unnoticed opportunities or knowledge about market data. Within the context of entrepreneurial activity, he offers a neo-Austrian redefinition of the concept of monopoly and competition. Since for Kirzner entrepreneurship involves no element of resource ownership, monopoly is defined as the impact of input ownership on the competitive process, and not the shape of the demand curve facing a firm. A monopoly position can be won by an alert entrepreneur. In the light of his theory of competition, Kirzner provides a new theoretical place for advertising and selling costs. Advertising, which promotes and calls attention to product differentiation, is the weapon of competition, which allows competitive-entrepreneurial adjustments in the type of products placed in the market in disequilibrium. Kirzner's revaluation of advertising is thus opposed to the idea of advertising as a social waste. Kirzner also offers a new conception of economic welfare based on the coordination-of-knowledge-and-actions instead of the orthodox allocation of social resources standard. (TNM)
Economic geography during an era of global competition involves a paradox. It is widely recognized that changes in technology and competition have diminished many of the traditional roles of location. Yet clusters, or geographic concentrations of interconnected companies, are a striking feature of virtually every national, regional, state, and even metropolitan economy, especially in more advanced nations. The prevalence of clusters reveals important insights about the microeconomics of competition and the role of location in competitive advantage. Even as old reasons for clustering have diminished in importance with globalization, new influences of clusters on competition have taken on growing importance in an increasingly complex, knowledge-based, and dynamic economy. Clusters represent a new way of thinking about national, state, and local economies, and they necessitate new roles for companies, government, and other institutions in enhancing competitiveness.
This paper proposes an algorithm for optimization inspired by the imperialistic competition. Like other evolutionary ones, the proposed algorithm starts with an initial population. Population individuals called country are in two types: colonies and imperialists that all together form some empires. Imperialistic competition among these empires forms the basis of the proposed evolutionary algorithm. During this competition, weak empires collapse and powerful ones take possession of their colonies. Imperialistic competition hopefully converges to a state in which there exist only one empire and its colonies are in the same position and have the same cost as the imperialist. Applying the proposed algorithm to some of benchmark cost functions, shows its ability in dealing with different types of optimization problems.
A central message of the tax competition literature is that independent governments engage in wasteful competition for scarce capital through reductions in tax rates and public expenditure levels. This paper discusses many of the contributions to this literature, ranging from early demonstrations of wasteful tax competition to more recent contributions that identify efficiencyenhancing roles for competition among governments. Such roles involve considerations not present in earlier models, including imperfectly-competitive market structures, government commitment problems, and political economy considerations.
Compares the organization of regional economies, focusing on Silicon Valley's thriving regional network-based system and Route 128's declining independent firm-based system. The history of California's Silicon Valley and Massachusetts' Route 128 as centers of innovation in the electronics indistry is traced since the 1970s to show how their network organization contributed to their ability to adapt to international competition. Both regions faced crises in the 1980s, when the minicomputers produced in Route 128 were replaced by personal computers, and Japanese competitors took over Silicon Valley's market for semiconductor memory. However, while corporations in the Route 128 region operated by internalization, using policies of secrecy and company loyalty to guard innovation, Silicon Valley fully utilized horizontal communication and open labor markets in addition to policies of fierce competition among firms. As a result, and despite mounting competition, Silicon Valley generated triple the number of new jobs between 1975 and 1990, and the market value of its firms increased $25 billion from 1986 to 1990 while Route 128 firms increased only $1 billion for the same time period. From analysis of these regions, it is clear that innovation should be a collective process, most successful when institutional and social boundaries dividing firms are broken down. A thriving regional economy depends not just on the initiative of individual entrepreneurs, but on an embedded network of social, technical, and commercial relationships between firms and external organizations. With increasingly fragmented markets, regional interdependencies rely on consistently renewed formal and informal relationships, as well as public funding for education, research, and training. Local industrial systems built on regional networks tend to be more flexible and technologically dynamic than do hierarchical, independent firm-based systems in which innovation is isolated within the boundaries of corporations. (CJC)
All organisms, especially terrestrial plants and other sessile species, interact mainly with their neighbors, but neighborhoods can differ in composition because of dispersal and mortality. There is increasingly strong evidence that the spatial structure created by these forces profoundly influences the dynamics, composition, and biodiversity of communities. Nonspatial models predict that no more consumer species can coexist at equilibrium than there are limiting resources. In contrast, a similar model that includes neighborhood competition and random dispersal among sites predicts stable coexistence of a potentially unlimited number of species on a single resource. Coexistence occurs because species with sufficiently high dispersal rates persist in sites not occupied by superior competitors. Coexistence requires limiting similarity and two—way or three—way interspecific trade—offs among competitive ability, colonization ability, and longevity. This spatial competition hypothesis seems to explain the coexistence of the numerous plant species that compete for a single limiting resource in the grasslands of Cedar Creek Natural History Area. It provides a testable, alternative explanation for other high diversity communities, such as tropical forests. The model can be tested (1) by determining if coexisting species have the requisite trade—offs in colonization, competition, and longevity, (2) by addition of propagules of propagules to determine if local species abundances are limited by dispersal, and (3) by comparisons of the effects on biodiversity of high rates of propagule addition for species that differ in competitive ability.
Conditions of entry into markets where sellers are few are analyzed intensively by Professor J. S. Bain in his Barriers to New Competition.1 In the tightly written first chapter the theory of entry is developed far beyond what was previously in the literature. There emerges a series of hypotheses as to the conditions of entry, and the probable degree to which they serve as barriers to new competition. A bold attempt is then made to measure the height of these barriers in 20 manufacturing industries. Predictions stemming from these empirical findings are compared with observed performance of these industries. Finally, the conclusions with respect to the significance of types of entry barriers lead to a number of observations as to public policy. All of this comprehensive analysis is carried out explicitly within the framework of comparative statics. Specifically excluded from the circumstances considered as having a significant effect on entry, and through that on the maximum level of the equilibrium price, are secular or cyclical [or episodic?] movements of demand, capacity or costs. Nor, except for a few notable cases of product innovation, does Bain believe that new sellers are able to alter the condition of entry. Instead, It is definitely posited for purposes of the present study-on the basis of extensive empirical observation-that the condition of entry as defined and its ultimate determinants are usually stable and slowly changing through time (p. 18). Such stability is elsewhere said to exist persistently over a period of time. Repeatedly this or a similar phrase appears to emphasize that observation ex post can be tied conceptually to the ex ante long-term equilibrium. Such stable and slowly changing conditions of entry are held to determine the ceiling price for an industry or the amount by which its price can, persistently, exceed the level . hypothetically attributed to long-run equilibrium in pure competition (p. 6). The actual persistent level of price may fall short of this entry-inviting level because of the nature of interfirm rivalry. The latter opens up the whole of oligopoly theory, but the author moves into that area only to indicate how the alternative solutions to interfirm rivalry would affect the price expectations of a would-be entrant. Entry is marked off from other sources of capacity expansion by the require-
The use of spatial ideas to interpret party competition is a universal phenomenon of modern politics. Such ideas are the common coin of political journalists and have extraordinary influence in the thought of political activists. Especially widespread is the conception of a liberal-conservative dimension on which parties maneuver for the support of a public that is itself distributed from left to right. This conception goes back at least to French revolutionary times and has recently gained new interest for an academic audience through its ingenious formalization by Downs and others. However, most spatial interpretations of party competition have a very poor fit with the evidence about how large-scale electorates and political leaders actually respond to politics. Indeed, the findings on this point are clear enough so that spatial ideas about party competition ought to be modified by empirical observation. I will review here evidence that the “space” in which American parties contend for electoral support is very unlike a single ideological dimension, and I will offer some suggestions toward revision of the prevailing spatial model.
Stereotype research emphasizes systematic processes over seemingly arbitrary contents, but content also may prove systematic. On the basis of stereotypes' intergroup functions, the stereotype content model hypothesizes that (a) 2 primary dimensions are competence and warmth, (b) frequent mixed clusters combine high warmth with low competence (paternalistic) or high competence with low warmth (envious), and (c) distinct emotions (pity, envy, admiration, contempt) differentiate the 4 competence-warmth combinations. Stereotypically, (d) status predicts high competence, and competition predicts low warmth. Nine varied samples rated gender, ethnicity, race, class, age, and disability out-groups. Contrary to antipathy models, 2 dimensions mattered, and many stereotypes were mixed, either pitying (low competence, high warmth subordinates) or envying (high competence, low warmth competitors). Stereotypically, status predicted competence, and competition predicted low warmth.
We analyze the effect of rising Chinese import competition between 1990 and 2007 on US local labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization and instrumenting for US imports using changes in Chinese imports by other high-income countries. Rising imports cause higher unemployment, lower labor force participation, and reduced wages in local labor markets that house import-competing manufacturing industries. In our main specification, import competition explains one-quarter of the contemporaneous aggregate decline in US manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in more trade-exposed labor markets. (JEL E24, F14, F16, J23, J31, L60, O47, R12, R23)
This paper presents a theory of competition among pressure groups for political influence. Political equilibrium depends on the efficiency of each group in producing pressure, the effect of additional pressure on their influence, the number of persons in different groups, and the deadweight cost of taxes and subsidies. An increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers. This analysis unifies the view that governments correct market failures with the view that they favor the politically powerful: both are produced by the competition for political favors.
The human gut harbors a large and complex community of beneficial microbes that remain stable over long periods. This stability is considered critical for good health but is poorly understood. Here we develop a body of ecological theory to help us understand microbiome stability. Although cooperating networks of microbes can be efficient, we find that they are often unstable. Counterintuitively, this finding indicates that hosts can benefit from microbial competition when this competition dampens cooperative networks and increases stability. More generally, stability is promoted by limiting positive feedbacks and weakening ecological interactions. We have analyzed host mechanisms for maintaining stability-including immune suppression, spatial structuring, and feeding of community members-and support our key predictions with recent data.
Are people right to think that competition improves corporate performance? The author's investigations indicate first that there are some theoretical reasons for believing this hypothesis to be correct but they are not overwhelming. Furthermore, the existing empirical evidence on this question is weak. However, the results reported here, based on the analysis of around 670 U.K. companies, provide some support for this view. Most important, the author presents evidence that competition, as measured by increased numbers of competitors or by lower levels of rents, is associated with a significantly higher rate of total factor productivity growth. Copyright 1996 by University of Chicago Press.
ABSTRACT There is a large body of literature that concludes that—when confronted with increased competition—banks rationally choose more risky portfolios. We argue that this literature has had a significant influence on regulators and central bankers. We review the empirical literature and conclude that the evidence is best described as “mixed.” We then show that existing theoretical analyses of this topic are fragile, since there exist fundamental risk‐incentive mechanisms that operate in exactly the opposite direction, causing banks to become more risky as their markets become more concentrated. These mechanisms should be essential ingredients of models of bank competition.
The amount of data in our world has been exploding, and analyzing large data sets—so-called big data— will become a key basis of competition, underpinning new waves of productivity growth, innovation, and consumer surplus, according to research by MGI and McKinsey's Business Technology Office. Leaders in every sector will have to grapple with the implications of big data, not just a few data-oriented managers. The increasing volume and detail of information captured by enterprises, the rise of multimedia, social media, and the Internet of Things will fuel exponential growth in data for the foreseeable future.
Global competition highlights asymmetries in the skill endowments of firms. Collaboration may provide an opportunity for one partner to internalize the skills of the other, and thus improve its position both within and without the alliance. Detailed analysis of nine international alliances yielded a fine-grained understanding of the determinants of interpartner learning. The study suggests that not all partners are equally adept at learning; that asymmetries in learning alter the relative bargaining power of partners; that stability and longevity may be inappropriate metrics of partnership success; that partners may have competitive, as well as collaborative aims, vis-à-vis each other; and that process may be more important than structure in determining learning outcomes.
In summary, then, our general conclusions are: (1) Populations of producers, carnivores, and decomposers are limited by their respective resources in the classical density-dependent fashion. (2) Interspecific competition must necessarily exist among the members of each of these three trophic levels. (3) Herbivores are seldom food-limited, appear most often to be predator-limited, and therefore are not likely to compete for common resources.