Date of this Version
Journal of Economic Dynamics and Control
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.
© 2005. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
market dominance, innovation, search
Harrington, J. E., & Chang, M. (2005). Co-Evolution of Firms and Consumers and the Implications for Market Dominance. Journal of Economic Dynamics and Control, 29 (1-2), 245-276. http://dx.doi.org/10.1016/j.jedc.2003.04.012
Date Posted: 27 November 2017
This document has been peer reviewed.