A Theory of Durable Dominance

Johan S. G. Chu ()
Additional contact information
Johan S. G. Chu: Booth School of Business, University of Chicago, Chicago, Illinois 60637

Strategy Science, 2018, vol. 3, issue 3, 498-512

Abstract: This paper demonstrates how increased competition entrenches dominants—a causal relationship I term durable dominance . Established theories of sustained dominance predict that a dominant’s grasp on its position weakens when resources become widely available and the number of competitors increases. This prediction stems from the assumption, from economics, that sustained dominance is only possible when competition is limited; perfectly competitive markets with large numbers of competitors, widely accessible resources, and no barriers to entry provide no basis for dominants to maintain their size. I challenge this assumption, first arguing that a dominant can benefit when the number of its competitors increases, garnering more consumer recognition and facing fewer challenges from its nearest competitors, then asserting that even when a dominant does not directly benefit, increased competition can decrease nondominants’ motility—magnitude of size changes—trammeling their growth to dominant size. Numerical simulations show reduced motility significantly lengthens the expected duration of a dominant’s reign when many new competitors enter the market. Durable dominance reverses established understandings of competitive dynamics and holds implications for an increasing number of settings as markets become global and financialized, and scalable resources for production and distribution become widely available.

Keywords: durable dominance; industrial organization; evolutionary economics (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1287/stsc.2018.0055 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:orstsc:v:3:y:2018:i:3:p:498-512

Access Statistics for this article

More articles in Strategy Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().