9512106 Pakes Industries and firms evolve over time. The object of the proposed research is to model what firms and industries look like at a particular point of time and how they change over time. Firms and industries are affected by the characteristics of the firms, the competitors and consumers. The model deals with the common existence of differentiated products. Plant, product, and detailed consumer demand data are integrated into the model, which is applied to the automobile and consumer electronics industry. The dynamic model is an exploratory model, as the model is complicated by the number of possible changes in the firms and industries over time. An attempt is made to make the dynamic model more tractable, by determining what frameworks are most relevant and concentrating on models with those features. Investment strategies and the cost of entering and exiting an industry are part of the dynamic model. In principle, a general dynamic model could be used to determine the future course of a significant number of firms and industries from any initial condition. The proposed research will examine ways to generalize the more specific model by used advanced computational methods. If the research is successful, the model could be applied to a much wider range of industries.
