A computational model of economies of scale and market share instability

Mazzucato, Mariana (1998) A computational model of economies of scale and market share instability. Structural Change and Economic Dynamics, 9 (1). pp. 55-83. ISSN 0954-349X

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Replicator 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.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Subjects: H Social Sciences
Depositing User: Joy Blake
Date Deposited: 06 Jan 2015 15:57
Last Modified: 06 Jan 2015 15:57
URI: http://srodev.sussex.ac.uk/id/eprint/51837
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