Book | Chapter

211690

Uncertainty and the size distribution of rewards from innovation

F. M. SchererDietmar HarhoffJörg Kukies

pp. 181-206

Abstract

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

Published in:

Mueller Dennis C., Cantner Uwe (2001) Capitalism and democracy in the 21st century: proceedings of the international Joseph A. Schumpeter society conference, Vienna 1998 "capitalism and socialism in the 21st century". Heidelberg, Physica.

Pages: 181-206

DOI: 10.1007/978-3-662-11287-8_10

Full citation:

Scherer F. M., Harhoff Dietmar, Kukies Jörg (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, 181–206.