Market Partitioning and the Geometry of the Resource Space
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Date
1999
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Abstract
The paper gives a geometry based explanation for organization ecology’s resource partitioning theory. The original theory explains market histories of generalist and specialist organizations with scale economies. We show that the main predictions can be restated in terms of certain structural properties of the n-dimensional Euclidean resource space. We model customer demand elaboration with the increasing number of dimensions (taste descriptors), and demonstrate that the resulting change in spatial configurations increases market concentration and enhances resource partitioning. The original and the proposed models of resource partitioning are complementary: their predicted effects add up and drive the events towards the perceived market phases. Moreover, each approach answers questions that the other cannot address.