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      The coevolution of the firm and the product attribute space

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          Abstract

          Traditionally, firm competition has been studied in contexts where the dimensionality of the product attribute space is given, and firms deploy their strategies constrained by this space. However, firms may exert influence on the local structure of the product attribute space by offering product variants with new attributes. As a result, the geometry of the product attribute space would change endogenously through firms’ actions, and this emergent new geometry modifies the conditions for subsequent firm behavior. By focusing on this interplay between actors and conditions, we explore the co-evolution of the firm and the product attribute space. Through a multi-variant Cournot competition framework, we develop a computational model in which firms invest to differentiate their products from other variants, but as minimally as possible so that demand from closely similar existing variants can be stolen. We introduce the fraction dimensionality of the attribute space as our critical independent variable, to reflect saturation of the space with product varieties. The simulation reveals that while new product variants are typically introduced by firms with scale economies, their performance gap with firms without scale economies reduces as fraction dimensionality increases. This indicates that space geometry evolution may favor small-scale players, even when their large-scale competitors are the driving force behind attribute space changes.

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          Most cited references46

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          A New Evolutionary Law

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            A Macrosociological Theory of Social Structure

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                Author and article information

                Contributors
                Role: ConceptualizationRole: Formal analysisRole: InvestigationRole: MethodologyRole: Writing – original draftRole: Writing – review & editing
                Role: Formal analysisRole: InvestigationRole: MethodologyRole: Writing – original draftRole: Writing – review & editing
                Role: Formal analysisRole: InvestigationRole: MethodologyRole: ResourcesRole: Writing – original draftRole: Writing – review & editing
                Role: Editor
                Journal
                PLoS One
                PLoS ONE
                plos
                plosone
                PLoS ONE
                Public Library of Science (San Francisco, CA USA )
                1932-6203
                12 June 2020
                2020
                : 15
                : 6
                : e0234007
                Affiliations
                [1 ] Department of Business Administration, Pontificia Universidad Javeriana, Bogotá, Colombia
                [2 ] Centre for Social Sciences, Hungarian Academy of Sciences Centre of Excellence, Budapest, Hungary
                [3 ] Institute of Social and Communication Sciences, Károli Gáspár University of the Reformed Church in Hungary, Budapest, Hungary
                [4 ] School of Business and Economics, Vrije Universiteit Amsterdam, Amsterdam, The Netherlands
                [5 ] Faculty of Business and Economics/Antwerp Management School, Antwerp, Belgium
                Shandong University of Science and Technology, CHINA
                Author notes

                Competing Interests: The authors have declared that no competing interests exist.

                Author information
                http://orcid.org/0000-0002-5395-5324
                http://orcid.org/0000-0003-1839-6915
                Article
                PONE-D-19-34089
                10.1371/journal.pone.0234007
                7292365
                32530953
                7fb27ea7-b2e5-4aa0-9342-c4a46a98acbd
                © 2020 García-Díaz et al

                This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

                History
                : 10 December 2019
                : 15 May 2020
                Page count
                Figures: 15, Tables: 0, Pages: 25
                Funding
                Funded by: funder-id http://dx.doi.org/10.13039/501100009543, Pontificia Universidad Javeriana;
                Award ID: Proyect ID 9546
                Award Recipient :
                This project has been financially supported by the “Vicerrectoría de Investigación / Facultad de Ciencias Económicas y Administrativas” of Pontificia Universidad Javeriana (Project ID: 9546; Dr. César García-Díaz).
                Categories
                Research Article
                Research and Analysis Methods
                Simulation and Modeling
                Agent-Based Modeling
                Computer and Information Sciences
                Systems Science
                Agent-Based Modeling
                Physical Sciences
                Mathematics
                Systems Science
                Agent-Based Modeling
                Social Sciences
                Economics
                Social Sciences
                Sociology
                Communications
                Marketing
                Social Sciences
                Economics
                Industrial Organization
                Monopolies
                Social Sciences
                Economics
                Financial Markets
                Economic Competition
                Research and Analysis Methods
                Simulation and Modeling
                Ecology and Environmental Sciences
                Habitats
                Physical Sciences
                Mathematics
                Applied Mathematics
                Game Theory
                Custom metadata
                Our work is a computer simulation study, which does not contain real data. The computer code (NetLogo) and corresponding documentation can be found in the following public repository: ( https://www.comses.net/codebases/30b41925-c56d-4428-b812-4351563cddcf/releases/1.0.0/).

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