Exploring the Effects of Public Research Funding on Biotech Innovation: An Agent-Based Simulation Approach

This paper presents an agent-based model of a localized biotech cluster and its socio-economic dynamics, with a special focus on the influence of public research funding on its innovation performance. It accounts for organizations-firms, universities, public research and other relevant organizations-as heterogeneous agents that are able to make investment decisions about conducting research, to exchange assets with other agents in geographical space, and to produce innovative output for generating revenues they need to survive. Agents receive feedback from the system level and may receive different types of public funding. The credibility of the model in the context of regional policy is strengthened by a transparent calibration and validation strategy based on own qualitative and quantitative empirical research, as well as secondary data from Vienna, Austria, in the period of 1999 to 2009. Thus, the presented model expands existing agent-based models of innovation in the biotech sector that focus primarily on qualitative aspects of agent behavior.