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

Original-research-article

Dynamic Model of Markets of Successive Product Generations

 

Joachim Kaldasch1*

1EBC Hochschule Berlin, Alexanderplatz 110178 Berlin, Germany.

Article Information
Editor(s):
(1) Frank F. C. Pan, Healthcare Business Administration, Healthcity Research Center, Taiwan.
Reviewers:
(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

Abstracts

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

Review History    Comments

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