Co-Evolution of Firms and Consumers and the Implications for Market Dominance

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Business Economics and Public Policy Papers
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market dominance
innovation
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Economics
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Harrington, Joseph E
Chang, Myong-Hun
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Consider a setting in which firms randomly discover new ideas that affect their products or services and implement favorable ones. At the same time that firms are adapting their offerings, consumers are searching among firms for the best match. It is shown that implicit in these dual dynamics is an increasing returns mechanism which can result in one firm dominating the market in the long run. The conditions under which there is sustained market dominance are characterized.

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2005-01-01
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Journal of Economic Dynamics and Control
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At the time of publication, author Joseph E. Harrington Jr. was affiliated with the John Hopkins University. Currently, he is a faculty member in the Business, Economics, Public Policy Department of the Wharton School at the University of Pennsylvania.
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