Do Price Dynamics Drive Musical Evolution?

38 Pages Posted: 17 Sep 2015

See all articles by Trent MacDonald

Trent MacDonald

RMIT University, Faculty of Business, School of Economics, Finance and Marketing, Students

Jason Potts

RMIT University

Date Written: June 1, 2013

Abstract

Do lower input prices to creative production reduce output prices or do they increase product variety? We propose an evolutionary model connecting price dynamics in input markets to innovation and variety generation in output markets. Lower input prices may be competed away in market share dynamics, but they may also induce a fall in the opportunity cost of entrepreneurial experimentation, leading to increased variety in output markets. Increased variety in creative output markets (i.e. niche creation through conceptual revolution) is explained here as a consequence of the entrepreneurial opportunities due to falling input prices. This falling-input-price-induced niche proliferation mechanism is examined with price and genre data from the music industry. We find that falls in input prices do seem to correlate with music genre proliferation.

Keywords: Niches, creative industries, music industry, innovation, variety, input prices

JEL Classification: Z11, B52, O31 D00

Suggested Citation

MacDonald, Trent and Potts, Jason, Do Price Dynamics Drive Musical Evolution? (June 1, 2013). Available at SSRN: https://ssrn.com/abstract=2661218 or http://dx.doi.org/10.2139/ssrn.2661218

Trent MacDonald (Contact Author)

RMIT University, Faculty of Business, School of Economics, Finance and Marketing, Students ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria
Australia

Jason Potts

RMIT University ( email )

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