Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144900
Authors: 
Herrmann, Johannes
Savin, Ivan
Year of Publication: 
2016
Series/Report no.: 
Jena Economic Research Papers 2016-004
Abstract: 
The pure model of replicator dynamics though providing important insights in the evolution of markets has not found much of empirical support. This paper extends the model to the case of firms vertically integrated in value chains. We show that i) by taking value chains into account, the replicator dynamics may revert its effect. In these regressive developments of market selection, firms with low fitness expand because of being integrated with highly fit partners, and the other way around; ii) allowing partner´s switching within a value chain illustrates that periods of instability in the early stage of industry life-cycle may be the result of an "optimization" of partners within a value chain providing a novel and simple explanation to the evidence discussed by Mazzucato (1998); iii) there are distinct differences in the contribution to market selection between the layers of a value chain, causing strategic advantages to firms in partnering.
Subjects: 
differential evolution
electricity storage
energy grid
feed-in tariff
renewable energy
JEL: 
C63
Q41
Q42
Q48
Document Type: 
Working Paper

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