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British Journal of Economics, Management & Trade, ISSN: 2278-098X,Vol.: 10, Issue.: 3


Dynamic Model of Markets of Successive Product Generations


Joachim Kaldasch1*

1EBC Hochschule Berlin, Alexanderplatz 110178 Berlin, Germany.

Article Information
(1) Frank F. C. Pan, Healthcare Business Administration, Healthcity Research Center, Taiwan.
(1) Anonymous, Jayaprakash Narayan College of Engineering, India.
(2) Anonymous, Nanhua University, Taiwan.
(3) Anonymous, Babes-Bolyai University, Romania.
Complete Peer review History: http://sciencedomain.org/review-history/11349


A dynamic microeconomic model is presented that establishes the price and unit sales evolution of heterogeneous goods consisting of successive homogenous product generations. It suggests that for a fast growing supply the mean price of the generations are governed by a logistic decline towards a floor price. It is shown that generations of a heterogeneous good are in mutual competition. Their market shares are therefore governed by a Fisher-Pry law while the total unit sales are governed by the lifecycle dynamics of the good. As a result the absolute unit sales of a generation exhibit a characteristic sales peak consisting of a rapid increase followed by a long tail. The presented approach shows that the evolution of successive product generations can be understood as an evolutionary adaptation process. The applicability of the model is confirmed by a comparison with empirical investigations on successive DRAM generations.

Keywords :

Product diffusion; evolutionary economics; multiple generations; competition; price evolution; DRAM market.

Full Article - PDF    Page 1-15

DOI : 10.9734/BJEMT/2015/20473

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