Variable structure modelling of dynamic industry systems

This paper argues for and develops a variable structure modelling methodolo gy, that is one which treats individual players in an industry as agents an d provides the means for agent entry and exit as well as evolution of their behaviour. The resulting simulation framework extends traditional industry dynamics approaches and object oriented simulation, unifies a number of co ncepts from software engineering, artificial intelligence and knowledge eng ineering and provides a rich, rule-based specification for describing a wid e range of structural changes. The framework allows the evolution of both s tructure and behaviour over time and is especially suited for modelling dyn amic industries and markets that can endogenously change their own structur e. We demonstrate the features and power of the modelling platform with a s tylised model of competition that extends earlier work in evolutionary econ omics and allows for firm entry and exit and outline a description of a bus iness application to the telecommunications industry.