• Selected
• Entire List

Abstract:
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.

Market Dominance, Innovation, Search

Abstract:
I propose a computational model of industry evolution capable of matching many stylized facts. It views the firm as a myopic but adaptive entity whose survival depends on its ability to perform various activities with greater efficiency than its rivals. In this model, the shakeout pattern arises naturally in the early stage of industrial development. I provide a full comparative dynamics analysis of how various industry-specific factors determine the numbers and the rates of entries and exits over time as well as the ages of the exiting firms.

Industry Dynamics, Shakeouts, Innovation, Imitation, Agent-Based Computational Model

Abstract:
Empirical studies have found high correlation between entry and exit across industries, indicating that industries differ substantially in their degree of firm turnover. I propose a computational model of dynamic oligopoly with entry and exit in a turbulent technological environment. I examine how industry-specific factors give rise to across industries differences in turnover. An analysis of the endogenous relationships between firm turnover, industry concentration, and the performance variables shows: 1) the rate of turnover and industry concentration are positively related; 2) industry concentration and market price are positively related; 3) no general relationship exists between industry concentration and price-cost margin.

Entry, Exit, Turnover, Technological Turbulence, Industry Dynamics, Market Structure