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A computational model of economies of scale and market share instability
journal contribution
posted on 2023-06-08, 19:23 authored by Mariana MazzucatoReplicator dynamics and computer simulation techniques are used to construct a reduced-form model which explores negative and positive feedback between the rate of a firm's cost reduction and its market share (‘dynamic’ returns to scale). Life-cycle phenomena are explored by combining positive and negative feedback in a firm's cost function. The objective of the model is to reproduce the patterns of concentration and instability found across a wide set of industries. Simulation results find that dynamic decreasing returns to scale produce instability and multiple equilibria in market shares, very different from the results generated from ‘static’ decreasing returns to scale.
History
Publication status
- Published
Journal
Structural Change and Economic DynamicsISSN
0954-349XPublisher
ElsevierExternal DOI
Issue
1Volume
9Page range
55-83Department affiliated with
- SPRU - Science Policy Research Unit Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2015-01-06Usage metrics
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