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A computational model of economies of scale and market share instability

Mazzucato, M; (1998) A computational model of economies of scale and market share instability. Structural Change and Economic Dynamics , 9 (1) pp. 55-83. 10.1016/S0954-349X(97)00037-4. Green open access

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Abstract

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.

Type: Article
Title: A computational model of economies of scale and market share instability
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/S0954-349X(97)00037-4
Publisher version: https://doi.org/10.1016/S0954-349X(97)00037-4
Language: English
Additional information: Copyright © 1998 Published by Elsevier B.V. This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Industry life-cycle; Market share dynamics; Replicator equations; Simulation; C63; L11; O30
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Inst for Innovation and Public Purpose
URI: https://discovery.ucl.ac.uk/id/eprint/1553102
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