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Replicator dynamics in value chains: explaining some puzzles of market selection

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posted on 2023-06-09, 16:28 authored by Uwe Cantner, Ivan Savin, Simone Vannuccini
The pure model of replicator dynamics provides important insights in the evolution of markets but has not met with much empirical support. This article extends the model to the case of firms vertically integrated into value chains (VCs). Through an extended analytical model and numerical simulations, we show that (i) by taking VCs into account, the replicator dynamics may reverse its effect. In these ”regressive developments” of market selection, firms with low fitness expand because of being integrated with highly fit partners, and the other way around; (ii) allowing a partner’s switching re-introduces selection forces into the upper layers of VCs; and (iii) periods of instability in the early stage of the industry life cycle may be the result of an optimization’ of partners within a value chain, thus providing a novel and simple explanation of the evidence discussed earlier in the literature.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Industrial and Corporate Change

ISSN

0960-6491

Publisher

Oxford University Press

Issue

3

Volume

28

Page range

589-611

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2019-01-10

First Open Access (FOA) Date

2021-01-02

First Compliant Deposit (FCD) Date

2019-01-09

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