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Market Dimensionality And The Proliferation Of Small-Scale Firms

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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)

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.

Suggested Citation

  • César García-Díaz & Arjen Van Witteloostuijn & Gábor Péli, 2008. "Market Dimensionality And The Proliferation Of Small-Scale Firms," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 11(02), pages 231-247.
    • Handle: RePEc:wsi:acsxxx:v:11:y:2008:i:02:n:s0219525908001593
    DOI: 10.1142/S0219525908001593
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    References listed on IDEAS

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    1. Charlotte Bruun (ed.), 2006. "Advances in Artificial Economics," Lecture Notes in Economics and Mathematical Systems, Springer, number 978-3-540-37249-3, December.
    2. Michael T. Hannan & László Pólos & Glenn R. Carroll, 2007. "Language Matters, from Logics of Organization Theory: Audiences, Codes, and Ecologies," Introductory Chapters, in: Logics of Organization Theory: Audiences, Codes, and Ecologies, Princeton University Press.
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    Cited by:

    1. Xu, Jin & Peng, Biyu & Cornelissen, Joep, 2021. "Modelling the network economy: A population ecology perspective on network dynamics," Technovation, Elsevier, vol. 102(C).

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