a comparative analysis of network creation and development ...terna.to.it/tesine/a comparative...

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Simulation Model for Economics – Andrea Salute N. 736757 A comparative analysis of network creation and development with NetLogo Abstract The purpose of this project is to create a model that compares the dynamics of network creation and development in a cluster scenario and in a free-market scenario. ClusterMode analyzes the formation of linkages using the acknowledged idea of proximity (Radius), which sees obtaining increasing Economies of Scale or Scope as the main goal of companies. MarketMode analyzes the formation of linkages in a scenario where companies have their core capabilities and look for external capabilities through partnership and M&A. PART I Introducing the model A network is a group of interconnected nodes with different kind of linkages. These linkages can be knowledge flows, collaboration, innovation, friendship, familiar relationship and almost everything that one can imagine. The model simulates the creation of a network between agents that represent different companies in different scenario: a cluster and a free-market one. The purpose is to analyze and create one model that involve two different “modes” with different assumptions. Cluster Mode The research field on localized knowledge spillover 1 asserts that co-localization in clusters, and so proximity, is the reason why companies benefit of externalities. Geographers instead, believe that geographical proximity is not sufficient by itself; a different kind of proximity is required 2 (like social or cognitive proximity). These theories are the pillar of Cluster Mode: there are different agents that represents our companies. Each agent can try to create a link with another agent given its distance (LINK PHASE). While the simulation goes, agents keep trying to create linkages and increase their radius if they are not able to find a partner. Last but not the least, Cooperation Propensity of the competitive environment influences the possibility to create links: higher level means a collaborative attitudes and so more willingness of actors to link with others. Because agents do not have any kind of information about the others, after the link phase, agents will have to evaluate the effectiveness of their link. 1 Literature of industrial clustering: see Krugman, Breschi and Lissoni, Audretsch and Feldamann 2 See for example Granovetter, Malberg, Maskell and Howells.

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SimulationModelforEconomics–AndreaSaluteN.736757

AcomparativeanalysisofnetworkcreationanddevelopmentwithNetLogo

Abstract

Thepurposeofthisprojectistocreateamodelthatcomparesthedynamicsofnetworkcreationanddevelopment ina cluster scenarioand ina free-market scenario.ClusterModeanalyzes theformation of linkages using the acknowledged idea of proximity (Radius), which sees obtainingincreasingEconomiesofScaleorScopeasthemaingoalofcompanies.MarketModeanalyzestheformation of linkages in a scenario where companies have their core capabilities and look forexternalcapabilitiesthroughpartnershipandM&A.

PARTIIntroducingthemodel

Anetworkisagroupof interconnectednodeswithdifferentkindof linkages.Theselinkagescanbe knowledge flows, collaboration, innovation, friendship, familiar relationship and almosteverythingthatonecanimagine.Themodelsimulatesthecreationofanetworkbetweenagentsthat represent different companies in different scenario: a cluster and a free-market one. Thepurpose is to analyze and create onemodel that involve two different “modes”with differentassumptions.

ClusterMode

Theresearchfieldonlocalizedknowledgespillover1assertsthatco-localizationinclusters,andsoproximity,isthereasonwhycompaniesbenefitofexternalities.Geographersinstead,believethatgeographical proximity is not sufficient by itself; a different kind of proximity is required2 (likesocialorcognitiveproximity).

These theories are the pillar of Cluster Mode: there are different agents that represents ourcompanies.Eachagentcantrytocreatealinkwithanotheragentgivenitsdistance(LINKPHASE).Whilethesimulationgoes,agentskeeptryingtocreatelinkagesandincreasetheirradiusiftheyarenotabletofindapartner.Lastbutnotthe least,CooperationPropensityofthecompetitiveenvironmentinfluencesthepossibilitytocreatelinks:higherlevelmeansacollaborativeattitudesand somorewillingness of actors to linkwith others. Because agents do not have any kind ofinformationabouttheothers,afterthelinkphase,agentswillhavetoevaluatetheeffectivenessoftheirlink.

1Literatureofindustrialclustering:seeKrugman,BreschiandLissoni,AudretschandFeldamann2SeeforexampleGranovetter,Malberg,MaskellandHowells.

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Many authors acknowledged that companies join a cluster to get economies of scale, speedorscope.Therefore,throughtheEVALUATIONPHASEeachlink issuccessfulonly ifbothagentsarelookingforeconomiesofscaleandthedistancebetweenthemisnottoohigh3.

MarketMode

Theoriesonmarket coopetition, state that companies can collaboratewithother competitor togetwhattheyneed.Enter intoanagreementallowedthepartiestosharetherisk,cutthecost,share knowledge and information, acquire technology and market access and many otheradvantages, and that isway collaborations have surged in recent years. Collaboration canhavemanydifferentshapes,butthemostimportantare:

• Partnership: two companies can collaborate to produce collectively, develop a commontechnology,sharelicenses,distributionplatformandsoon.

• Acquisition:acompanycandecidetobuyanother.• Merger:twocompanycandecidetomergetheircompanycreatingabrandnewone.

The Market Mode is a simulation of the coopetition in a free-market environment, wherecompanies can grow internally or externally4. Differently from Cluster Mode, there is noevaluation phase here, but only a LINK PHASE: agents look around (without radius) to find apartnerandcreatealink.Ifthemarketneed5matchesotheragent’smarketproperties6,thetwoagentslinkthemselves.Ifthecollaborationhassuccess,thetwoagentsbecomealliesandincreasetheirproperties;else,theykeeplookingforanotherpossiblepartner.

Anotherresearchfieldofcluster literaturestatesthat“AbsorptiveCapacity”7influencesnetworkcreation and development. Absorptive Capacity is a function of knowledge base of the firm,meaningtheabilityoffirmtoabsorbandexploitexternalknowledge.Empiricalresultsshowthatfirmwithhigherabsorptivecapacitywillplayamore importantrole in thenetworkandtendtohave more linkages than the average8. Market Mode uses this approach to create the M&APHASE:

A) Acquisition: each agent can purchase another agent only if its absorptive capacity is higherthantheotherone.

B)Merge:eachagentcanmergewithanotheronlyifthedifferencebetweenabsorptivecapacitiesofbothagentarelowerofacertainrange(DeltaAC)andarecompatible(Compatibility)thatcanbemodifiedbytheuser.9

3Theproxyforproximityistheaverageradiusofagents4ExternalgrowthmeansM&A5“Marketneed”representswhattheagentislookingfor:marketaccessortechnology?6“Marketproperties”representsthecorecapabilityofeachagent:marketortechnology?7SeeElisaGiuliani9Theideaisthatifthedistancebetweenabsorptivecapacitiesislower,probabilityofasuccessfulacquisitionishigherintermsofcompatibility.

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In thismode, there is a LIMIT RULE based on the idea of antitrust. Usually, companies cannotperformM&Awhenthereareanti-competitiveeffectsandthecreationofadominanceposition.Ifthe resulting new agent will get too much power, Antitrust Authority will block any M&Aoperation.10

PartII:CodeandModelDescription

Thefirstpartofthecodeconcernsthedeclarationofvariablesandbreeds:

GlobalVariablearevariablesthathaveauniquevalue,accessiblebyeveryagentsineverypartofthecode

Breedsarespecialkindofturtles,likeasubgroup

Turtles-ownVariablesarevariablesthathaveown-valueforeveryturtle

GlobalVariables

• TotalSize:isthesumofsizeofallagents• Regulation:isthenumberofantitrustauthorityblocks• Matches:isthenumberoflinkestablished• Failures: is thenumberof times that a link is not establishedor thatdonotpass theevaluation

phase• Acquisitions:numberofacquisitiondeals• Alliances:numberofalliancesdeals• Mergers:numbersofmergersdeals

Breeds

• Breed[clusterscluster]:turtlethathasestablishedacluster-link• Breed[alliesally]:turtlethathasestablishedanalliance• Breed[AcqCompaniesAcqCompany]:turtlethathasacquiredanotherturtle• Breed[mergedsmerged]:turtlethathasmergedwithanotherturtles

Turtles-ownVariables

• R:istheradiususedtolookforapartner• Explored?:iftrue,theturtlehasalreadytriedtolinkwiththisturtle• PossiblePartner:turtlewithwhomhasestablishedalink• EconomiesOfScale:binaryattributethatdescribeifthelevelofeconomiciesofscaleinClusterMode• Market:attributethatrepresentsmarketcapabilityorsearchinMarketMode• Technology:attributethatrepresentstechnologycapabilityorsearchinMarketMode• Market_Need:whatkindofcapabilitiestheturtleislookingforinMarketMode• Market_Properties:whatkindofcapabilitiestheturtlescanofferinMarketMode• Compatibility:describeiftwoagentareabletomergewitheachotherornotinMarketMode

10Size/TotalSizehavebeenusedasaproxyofmarketpower.Dominancethresholdissetto>40%

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Setup

Clearallresults,theinterfaceandvaluesofvariablesandcreateanumberofturtlesthatisdefinedbytheuserwiththeslider“nTurtles”.Theneachturtlesetitsturtles-ownvariablesrandomly(theuserdefinethevalue of R through the slider “RadiusRange?). To ifelse statement defineswhat are the capabilities thateachturtleoffers,andwhat thosewhich looks for.Thenresets thetickscounterandtheturtlespositionthemselvesrandomlyintheenvironment.

FinallyanotherifelsestatementswitchofftheMarketModebuttoniftheClusterModeisonandviceversa,showingsome informationabout radiusandcooperationpropensity inClusterModeandSize,AbsorptiveCapacity,marketneed,marketpropertiesinMarketMode.

Herethereisthecode:

tosetup

ca

create-turtlesnTurtles[setRRadiusRange?+random10

setsize1

setcolorblue

setEconomiesOfScalerandom3

setcompatibilityrandom4

setexplored?false

setmarketrandom10

settechnologyrandom10

setabsorptive_capacityACrange?+random10

ifelserandom-float100<50[setmarket_needmarket][setmarket_needtechnology]

ifelserandom-float100<50[setmarket_propertiesmarket][setmarket_propertiestechnology]]

reset-ticks

askturtles[setxyrandom-xcorrandom-ycor]

ifelse(ClusterMode?=true)

[setMarketMode?false

output-type"AverageRadiusofturtlesis"output-printmean[R]ofturtles

output-type"LevelofCooperationPropensityis"output-printCooperationPropensity

]

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[setMarketMode?true

output-type " Average Absorptive Capacity of turtles is " output-print mean [absorptive_capacity] ofturtles

output-type"Averagesizeofturtlesis"output-printmean[size]ofturtles

output-type " The number of agents looking for market access is " output-print count turtles with[market_properties=market]

output-type " The number of agents looking for technology is " output-print count turtles with[market_properties=technology]

]

End

Goprocedure

After the setup, ask all turtles toperform“ClusterMode”, then “MarketMode”. If all the turtleshave alreadybeenexplored (the turtle has tried to linkwith all theother turtles), then stop. IfRegulation(numberofAntitrustblocks)ishigherthan60,thenstop.

Herethereisthecode:

togo

ifnotany?turtleswith[notexplored?][stop]

ifRegulation>60[stop]

ClusterMode

MarketMode

tick

end

ClusterMode

IftheClusterModebuttonison,thenperform“LookAround”and“Evaluation”procedure

toClusterMode

ifClusterMode?[LookAroundEvaluation]

end

LookAround(ClusterMode)

Askallturtles,thatdonotbelongstoclustersbreed,tochoosea“PossiblePartner”betweenoneofotherturtlesinradiusR(sliderRadiusRange?)thatisnotbeenexploredyet(“notexplored?”).Ifthis PossiblePartner exists and a random number in range (0-1) is lower than “CooperationPropensity”, then create a link, increases matches and show in the command center “We’re

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partnersnow”.Finallyaskyourpartnertosetisvariable“explored?”totrue(theturtlewillknowthatthisturtleswasapartnerandwillnottrytolinkwithitanymore).Else,increasestheradiusandprintinthecommandcenter“Ineedtogofurther”.Thenalltheturtleswaitfor1second.

Lastly,an ifelsestatementaskstheprogramtoshowthe levelofR inthe interface ifthebutton“show-radius?”ison.

Herethereisthecode:

toLookAround

askturtles

[ifbreed!=clusters

[setPossiblePartnerone-ofotherturtleswith[notexplored?]in-radiusR

ifelsePossiblePartner!=nobodyandrandom-float1<CooperationPropensity

[create-link-withPossiblePartner

askPossiblePartner[setexplored?true]

setmatchesmatches+1

show"We'repartnersnow”]]]

[setRR+1

show"Ineedtogofurther"]

ifelseshow-radius?

[setlabelR]

[setlabel""]]]

wait1

end

Evaluation(ClusterMode)

If:

• The“PossiblePartner”existsand• Levelof“EconomiesOfScale”isthesameofthe“PossiblePartner”and• Radiusofturtlesislowerthanaverageradiusofallturtles

Askturtlestochangecolortored,breedtoclusters,printinthecommandcenter“We’reaclusternow”andtoask“PossiblePartner”todothesame,exceptforthestatement.

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Else, increase failures of + 1 and print “Gone bad, keep searching”. In both case, show in theoutputtheaverageradiusofturtlesandtheratiomatches/failures

Herethereisthecode:

toEvaluation

askturtles

[ifPossiblePartner!=nobody

[ifelseEconomiesOfScale=[EconomiesOfScale]ofPossiblePartnerandR<mean[R]ofotherturtles

[setcolorred

setbreedclusters

show"We'reaclusternow"

askPossiblePartner

[setcolorred

setbreedclusters]]

[setfailuresfailures+1

show"Gonebad,keepsearching"]]]

output-type"AverageRadiusofturtlesis"output-printmean[R]ofturtles

output-type"TheratioMatches/Failuresis"output-print(matches/failures)

end

MarketMode

IftheMarketModebuttonison,performs“MarketInteractions”,“Acquisition”and“Merge”.

Herethereisthecode:

toMarketMode

ifMarketMode?[MarketInteractionAcquisitionMerge]

end

MarketInteraction(MarketMode)

Ask all turtles to choose a “PossiblePartner”, if exists, and if the “PossiblePartner” is offeringexactlywhattheturtleislookingfor,then:

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• Createalink• State“We’realliesnow”• Increaseabsorptivecapacityof+1• Increasealliancesof+1• Changebreedto“allies”• Increasematchesof+1• AskPossiblePartnertodothesameandset“explored?”=true.

Else,increasesfailuresof+1andstate“YoudonothavewhatIamlookingfor”

Herethereisthecode:

toMarketInteraction

askturtles[

setPossiblePartnerone-ofotherturtleswith[notexplored?]

ifPossiblePartner!=nobody

[ifelsemarket_need=[market_properties]ofPossiblePartner

[create-link-withPossiblePartner

show"We'realliesnow"

setabsorptive_capacityabsorptive_capacity+0.5

setalliancesalliances+1

setbreedallies

setmatchesmatches+1

askPossiblePartner[setexplored?true

setbreedallies

setabsorptive_capacityabsorptive_capacity+0.5]]

[setfailuresfailures+1

show"Youdonothavewhatiamlookingfor"]]]

end

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Acquisition(MarketMode)

Giveto“TotalSize”thevalueofthesumofthesizeofeachturtle.IfPossiblePartnerexistsanditsabsorptive capacity is lower than turtle perform the ifelse statement: if the size after theacquisition is lower than 40% then acquire the company and set the variables, else, increaseRegulationof+1andstate“Ihaveboughtcompanynumberx“

toAcquisition

askturtles

[setTotalSizesum[size]ofturtles

ifPossiblePartner!=nobodyandabsorptive_capacity>[absorptive_capacity]ofPossiblePartner

[ifelse((size+0.5)/TotalSize)<0.40[

setcoloryellow

setsizesize+0.5

setexplored?true

setbreedAcqCompanies

setacquisitionsacquisitions+1

setabsorptive_capacityabsorptive_capacity+1

setmarket_propertiesmarket_properties+1

show"ihaveboughtcompany"print[who]ofPossiblePartner

askPossiblePartner[die]]

[

show"Antitrustauthorityblockedtheacquisition"

setRegulationRegulation+1]]]

end

Merge(MarketMode)

Stopiftherearenomoreturtleswith“explored?”=false(iftheturtleshastriedtolinkwitheveryotherturtle).Askturtles,if“PossiblePartner”stillexistsandthedifferenceinabsorptivecapacityis lower than “DeltaAC” (the user will set the value with the slider) and the two turtle arecompatible, then merge with the company, change breed, absorb the properties of the othercompanyandaskthe“PossiblePartner”todie.Inthisway,theturtleistransformedinanewturtle

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thatinheritthesumofvariablesofthetwoturtle.Butthemergerisallowedonlyiftheresultingsizeis lowerthanthe40%of“TotalSIze”.Else,state“Antitrustblockedthemerger”andincreaseRegulation + 1. Show in the output the mean of absorptive capacity and size, the ratiomatches/failures.

toMerge

ifnotany?turtleswith[notexplored?][stop]

askturtles

[ifPossiblePartner!=nobodyand(absorptive_capacity-[absorptive_capacity]ofPossiblePartner)<DeltaACandcompatibility=[compatibility]ofPossiblePartner

[setTotalSizesum[size]ofturtles

ifelse((size+[size]ofPossiblePartner)/TotalSize)<0.40[

setbreedmergeds

setcolorred

setsizesize+[size]ofPossiblePartner

setabsorptive_capacityabsorptive_capacity+[absorptive_capacity]ofPossiblePartner

setmarket_propertiesmarket_properties+[market_properties]ofPossiblePartner

show"Ihavemergedwith"print[who]ofPossiblePartner

askPossiblePartner[die]

setmergersmergers+1]

[

show"Antitrustauthorityblockedthemerger"

setRegulationRegulation+1]]]

output-type"AverageAbsorptiveCapacityofturtlesis"output-printmean[absorptive_capacity]ofturtles

output-type"Averagesizeofturtlesis"output-printmean[size]ofturtles

output-type"TheratioMatches/Failuresis"output-print(matches/failures)

output-type"Thenumberofantitrustregulationhavebeen"output-printRegulation

end

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PartIIIResultsandDiscussion

To evaluate results, the author have run the simulation using three different scenario: low,intermediate, high level of variables. Due to the fact that reporting every attemptswill be toolong,theauthorchoosetorunatleast5simulationforeachscenarioandthenreport,foreachofthem,theonethatwasthemostrepresentative.

ClusterScenario1

Figure1ClusterScenario1:Interfaceatthebeginning

Scenario1wasanattempttorunthesimulationwithlowvaluesofallthevariablesofthemodel.Thereare10turtles,withaCooperationPropensityof0.2 (about20%), that lookaroundwitharadiusof2+arandomvaluethatisgivenbytheprogram.Theradiusdistributionisintheinterval(2,10): four turtleshavevaluesaround2-4and three turtlesaround5-7andother three turtlespreadinthedistribution.Lookingattheoutputwindow(bottom-rightofthepicture),ispossibletoseethattheaverageradius is5.7.Figure2depictsthe interfaceattheendofthesimulation.

Figure2ClusterScenario1:interfaceattheend

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GiventhelowCooperationPropensityofturtles,theratiobetweennumberofmatches(10)andnumberoffailures(69) isverylow(about0.144).Fiveturtleswereabletosatisfytheevaluationphaseandfixedtheir links,changingbreedtoclustersandcolortored.Despitethesuccessandtheformationofanetworkthatencloseaboutthe80%oftheturtles,asitispossibletoseefromthepicture, a clusterwasnot formed (a cluster is anetworkofat least three red turtles linkedtogether).Theradiusdistributionissplitintotwopart:clustersbreedhavearadiuslowerthan10,with an average value of 8,while blue turtles (normal ones) have an average radius of 27. Nosubgroupsexist.

ClusterScenario2

Figure3ClusterScenario2:Interfaceatthebeginning

Figure3representsScenario2,anattempttorunthesimulationwith intermediatevaluesofallthevariablesofthemodel.Thereare25turtles,withaCooperationPropensityof0.6(about60%),that lookaroundwitha radiusof3+a randomvalue that isgivenby theprogram. The radiusdistributionis intheinterval(3,12):therearethreegroupof5turtlesovertheaveragevalue8,andanotherbiggroupandtwosmallgroupbelowit.Lookingattheoutputwindow(bottom-rightofthepicture),ispossibletoseethattheaverageradiusis8.Figure4depictstheinterfaceattheendofthesimulation.

Given the medium level of Cooperation Propensity of turtles, the ratio between number ofmatches (25)andnumberof failures (42) ismedium-high (about0.61).The firstdifferencewithScenario1isthedynamicoftheratio:asis itpossibletoseein“MatchesVSFailures”chart,thetwocurvesbehaveinthesamewayuntilthehalfofthelinkphaseandthendiverge.Anotherbigdifferenceistheradiusdistributions:theglobalintervalisthesame(3,12)butturtlesarefarmoreheterogenousthanpreviously.Theaverageradiusislower(10<18),andthesameisforradiusofblueturtles(10<27).Averageradiusofclustersbreedisanexception:thevalueishigher(9>8)Eleven turtleswereable to satisfy theevaluationphaseand fixed their links, changingbreed toclustersandcolortored.Thisresultismorethantwicetheprevious(11>5).

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Figure4ClusterScenario2:interfaceattheend

Comparingthenetwork, is itpossibletoobservesthat inScenario2arealnetworkwascreated,withthepresenceof3smallgroups(coloredcircleinthepicture)andtworealcluster(greenandbluecircle).These twoclusteraredifferent: thegreenone is isolated,while theblueonehasagreater number of linkages (5 clusters turtles > 4) and in addition cooperates with three blueturtle.

ClusterScenario3

Figure5ClusterScenario3:interfaceatthebeginning

Figure 5 represents Scenario 3, an attempt to run the simulation with high values of all thevariablesof themodel. Thereare35 turtles,withaCooperationPropensityof0.9 (about90%),that lookaroundwitha radiusof4+a randomvalue that isgivenby theprogram. The radius

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distribution is in the interval (4, 13), wider than Scenario 1 and 2. The distribution is lessdistributed than Scenario 2 butmoredistributed than Scenario 1: there are twomain groupofabout10-12turtlesovertheaveragevalue5and10,andothersmallgroupsalongthecurve. Insomeway,isitpossibletostatethatthedistributionisbipolarized.Lookingattheoutputwindow(bottom-rightofthepicture),ispossibletoseethattheaverageradiusis8.1

Figure6ClusterScenario3:interfaceattheend

The ratio between number ofmatches (35) and failures (34) is high (about 1.02). This result ishigher than Cooperation Propensity because of the role played by the increased radius. Asobservedbefore,theradiusdistributionisstillpolarized,butthemaingrouparethreeattheend.Therefor theradiusdistribution is tripolarized.Theaveragetotal radius is lowerthanScenario1and2(8.4<10<18)andisitthesameforradiusofblueturtles(9<10<27). Fourteenturtleswereabletofixedtheirlink(14>11>5)

ComparingthenetworkwithScenario2,isitpossibletoobservesthattheremoresubgroups(5>3)butthereisonlyoneclusters(whileinScenario2weretwoofthem).Inaddition,theclusterisisolatedandnotlinkedwithotherturtles.Finallytheclusterisnotarealnetworkbutlookslikeasupplychain.Asfarasnetworksareconcerns,thereisamuchgreaternumberofnetworks:twobignetwork,asmallnetwork,acliqueandthecluster.

Concluding the analysis on ClusterMode, the results show that the more the values of thevariablesincrease,themorethenumberandheterogeneityofnetworks.Clusterstendtoformedasnetworkswhenthescopeofsearch(radius)ismoreheterogeneous.

MarketScenario1

Figure7representstheinterfaceofthefirstscenariowithlowlevelof“DeltaAC”,athresholdthatinfluence the merger procedure11 and low level of “ACrange?”which influences the level ofabsorptive capacity. There are 20 turtles with an average value of absorptive capacity of 6.6.AbsorptiveCapacitydistributionisheterogeneousbutwithastronggroupofsixturtlesalongthe

11IfthedifferencebetweenabsorptivecapacitiesislowerthanDeltaAC,themergerisallowed

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average. Nine agents are looking for “market access”, while eleven agents are looking for“technology”.

Figure7MarketScenario1:interfaceatthebeginning

Figure8showsagreatnumberofalliancescomparestomergersandalliances(respectively10,4,1). The low level for alliances (only 1match), results in very low level ofmatches/failures ratio(0.005).AverageAbsorptiveCapacityis13.4,whilethesizeis2.5.Inaddition,thereisaveryhighnumberofRegulation(61).Thegraphshowsthepresenceof1normalturtle,1mergedturtleand4acquiredturtleswithdifferentsize(meaningdifferentlevelofacquisitions)andnocollaborationlinkages.

Figure8MarketScenario1:interfaceattheend

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MarketScenario2

Figure9MarketScenario2:interfaceatthebeginning

Scenario 2 is an intermediate simulation, with average absorptive capacity of 8.7 (in the firstscenario was 6.6) and DeltaAC at 2 (previously was 0). Absorptive Capacity distribution isextremelyfocusonvaluesinrange(5-7)and(8-13).

Figure10MarketScenario2:interfaceattheend

ComparingtheresultswithScenario1,thefirstimportantpointisthatwedonothaveanykindofRegulation(0)andmerger.Theratiomatches/failuresisthesameandsothenumberofalliances.This is strange because of the increased value of absorptive capacity and DeltaAC. A higherDeltaAC should have caused a surge in the number of mergers. Nevertheless, there is highprobability that this result isdue to thecompatibilityvariable.The lackofmergers increase thenumberofsurvivedturtlesandincreasevarietyamongstthem.Observingthegraph,wecansee

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thattheacquisitionprocessismoredistributedthanScenario1andtwoblueturtleswereabletosurvive.Inaddition,valuesofabsorptivecapacityaremoreheterogeneous.

MarketScenario3

Figure11MarketScenario3:interfaceattheend

Figure 11 reports Scenario 3 setup, with a DeltaAC level of 5 and ACrange? of 9. AbsorptiveCapacityiswelldistributed,butthereisastronggrouparoundthecentralvalue(13.25).

Figure12MarketScenario3:interfaceattheend

Comparing Scenario 3 with the others scenarios, it is possible to observes that this is thesimulation with the highest number of survived turtles at the end (10 > 9 > 6) and the mostheterogeneous in terms of variety of results. Indeed, there are seven acquisition turtles, onemergedturtlesandonenormalturtle.Inaddition,itistheuniquescenariowherethereisalink,

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between a yellow turtle and a blue turtle. Like Scenario 1, absorptive capacity distribution isstrictlypolarizedaroundthevalue14.Theratiomatches/failuresisthehighest(0.176).

Comparingallscenarios,weobservedthatthereisnotanykindofnetworkbecauseturtlespreferto M&A, and use collaborations only whenM&A is not allowed or possible. This result is notunexpectedbutdrivenbythecodenature.ItisclearthatM&Aprocessesgraphicallyobscuredthepresenceoflinkagesbetweenturtles.