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A computational model of economies of scale and market share instability

Mazzucato, Mariana (1998). A computational model of economies of scale and market share instability. Structural change and economic dynamics, 9(1) pp. 55–83.

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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.

Item Type: Journal Item
Copyright Holders: 1998 Elsevier Science B.V.
ISSN: 0954-349X
Academic Unit/School: Faculty of Arts and Social Sciences (FASS) > Politics, Philosophy, Economics, Development, Geography
Faculty of Arts and Social Sciences (FASS)
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Item ID: 22218
Depositing User: Radha Ray
Date Deposited: 02 Jul 2010 14:23
Last Modified: 04 Oct 2016 10:40
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