MARKET DIMENSIONALITY AND THE PROLIFERATION OF SMALL-SCALE FIRMS

César García-Díaz (), Arjen van Witteloostuijn () and Gábor Péli ()
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César García-Díaz: Faculty of Economics and Business, University of Groningen, Landleven 5 9747 AD, Groningen, The Netherlands
Arjen van Witteloostuijn: Faculty of Applied Economics, University of Antwerp, Stadscampus S.Z.403, Kipdorp 61 2000, Antwerp, Belgium
Gábor Péli: Faculty of Economics and Business, University of Groningen, Landleven 5 9747 AD, Groningen, The Netherlands

Advances in Complex Systems (ACS), 2008, vol. 11, issue 02, 231-247

Abstract: We build an agent-based computational model to study how the changing number of active product variants in a two-dimensional product space affects the performance of different firm types (i.e. large-scale and small-scale enterprises). We use an alternative approach to measure product space dimensionality, considering that dimensions may be afractionof the Euclidean measure. The results confirm that high dimensionality gives advantage to small-scale firms. Additionally, we find that large-scale firms may also benefit from initial increasing dimensionality, since it allows a small degree of product differentiation and price discrimination.

Keywords: Agent-based modeling; market dimensionality; market evolution (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0219525908001593

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