Income distribution, market size and the evolution of industry |
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Authors: | Zhu Wang |
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Affiliation: | aFederal Reserve Bank of Kansas City, 925 Grand Boulevard, Kansas City, MO 64198, USA |
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Abstract: | An industry typically experiences initial mass entry and later shakeout of producers over its life cycle. However, the timing of the evolution varies substantially across markets. By exploring the dynamic interactions between technology progress and demand diffusion, our theory suggests that the cross-market differences of industrial evolution are largely the result of underlying demand factors. Particularly, higher consumer income or larger market size tends to drive faster demand diffusion and earlier industry shakeout. A comparative study on the US and UK television industries supports the theoretical findings. |
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Keywords: | Product diffusion Industry life cycle Shakeout |
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