Market dimensionality and the proliferation of small-scale firms

César García-Díaz*, Arjen Van Witteloostuijn, Gábor Péli

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

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 a fraction of 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.

Original languageEnglish
Pages (from-to)231-247
Number of pages17
JournalADVANCES IN COMPLEX SYSTEMS
Volume11
Issue number2
DOIs
Publication statusPublished - 1 Jan 2008
Externally publishedYes

Keywords

  • Agent-based modeling
  • Market dimensionality
  • Market evolution

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