Do Price Dynamics Drive Musical Evolution?

38 Pages Posted: 17 Sep 2015

See all articles by Trent MacDonald

Trent MacDonald

RMIT University; RMIT Blockchain Innovation Hub; ARC Centre of Excellence for Automated Decision-Making and Society

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 ( email )

124 La Trobe Street
Melbourne, VIC 3000
Australia

RMIT Blockchain Innovation Hub ( email )

106-108 Victoria Street
Carlton, VIC 3053
Australia

ARC Centre of Excellence for Automated Decision-Making and Society ( email )

106-108 Victoria Street
Carlton, VIC 3053
Australia

Jason Potts

RMIT University ( email )

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