Agent-Based Computational Economics and Industrial Organization Theory

Agent-based computational economics (ACE) is “the computational study of economic processes modeled as dynamic systems of interacting agents.” This new perspective offered by agent-based approach makes it suitable for building models in industrial organization (IO), whose scope is the study of the strategic behavior of firms and their direct interactions. Better understanding of industries’ dynamics is useful in order to analyze firms’ contribution to economic welfare and improve government policy in relation to these industries.