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Firm Adaptation Consumer Sorting and Market Dominance

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  • Joseph E Harrington Jr

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

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Bibliographic Info

Paper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 448.

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Date of creation: Jun 2001
Date of revision: Feb 2002
Handle: RePEc:jhu:papers:448

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