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Studies on the evolution of market and customer behavior

A good theory of business is vital to the success of a firm and the theory of business must be based on the analysis of market evolution. The mechanisms of self-reinforcement or positive feedback, which were ignored to some extent by the assumption of diminishing returns on the margin (local negative feedback), play an important role in the evolutionary dynamics of market economy. With the fast development of technology, especially information techniques, the positive feedback in the global economy comes to be enhanced such that it cannot be neglected any longer. Positive feedback is quite important to the evolution of natural species as well as to the evolution of the market. In this paper we try to formalize the interaction between customers and firms in the process of the evolution of market structure and make a better explanation to the objectives and behaviors of firms and customers.