Firm Adaptation Consumer Sorting and Market Dominance

Joseph Harrington ()

Economics Working Paper Archive from The Johns Hopkins University,Department of Economics

Abstract: Consider a setting in which firms randomly discover new ideas that affect their products or services and implement only those ideas which increase current profit At the same time that firms are adapting their offerings consumers are searching among firms for the best match It is shown that implicit in these dual dynamics is an increasing returns mechanism which can result in one firm dominating the market in the long run The conditions under which there is sustained market dominance are characterized

Date: 2001-06, Revised 2002-02
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Persistent link: https://EconPapers.repec.org/RePEc:jhu:papers:448

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