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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 Mazzucato
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.

History

Publication status

  • Published

Journal

Structural Change and Economic Dynamics

ISSN

0954-349X

Publisher

Elsevier

Issue

1

Volume

9

Page range

55-83

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2015-01-06

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