Competitive Dynamics of Web Sites
22 Pages Posted: 8 Jun 2000
Date Written: March 17, 2000
We present a dynamical model of web site growth in order to explore the effects of competition among web sites and to determine how they affect the nature of markets. We show that under general conditions, as the competition between sites increases, the model exhibits a sudden transition from a regime in which many sites thrive simultaneously, to a "winner take all market" in which a few sites grab almost all the users, while most other sites go nearly extinct. This prediction is in agreement with recent measurements on the nature of electronic markets.
JEL Classification: D41, D50
Suggested Citation: Suggested Citation