Repository | Book | Chapter
(2001) Capitalism and democracy in the 21st century, Heidelberg, Physica.
Uncertainty and the size distribution of rewards from innovation
F. M. Scherer, Dietmar Harhoff, Jörg Kukies
pp. 181-206
Previous research has shown that the distribution of profit outcomes from technological innovations is highly skew. This paper builds upon those detailed findings to ask: what stochastic processes can plausibly be inferred to have generated the observed distributions? After reviewing the evidence, this paper reports on several stochastic model simulations, including a pure Gibrat random walk with monthly changes approximating those observed for high-technology startup company stocks and a more richly specified model blending internal and external market uncertainties. The most highly specified simulations suggest that the set of profit potentials tapped by innovators is itself skew-distributed and that the number of entrants into innovation races is more likely to be independent of market size than stochastically dependent upon it.
Publication details
DOI: 10.1007/978-3-662-11287-8_10
Full citation:
Scherer, F. M. , Harhoff, D. , Kukies, J. (2001)., Uncertainty and the size distribution of rewards from innovation, in D. C. Mueller & U. Cantner (eds.), Capitalism and democracy in the 21st century, Heidelberg, Physica, pp. 181-206.
This document is unfortunately not available for download at the moment.