Learning and Evolution in Markets Under Uncertainty
{'Code': '04050100', 'Directorate': {'LongName': 'Direct For Social, Behav & Economic Scie'}, 'Division': {'LongName': 'Divn Of Social and Economic Sciences'}}
{'SignBlockName': 'Lynn A. Pollnow'}
This project examines the investment decisions of firms in industries           where new products are introduced.  In the Economics literature,                certain patterns of growth and evolution of new industries have been            postulated theoretically, and verified statistically.  Commencing with          the introduction of the new product, there is a "growth era" during             which existing firms make substantial profits and new producers enter           the market, then follows a "shakeout period" when prices and                    profitability decrease and some firms leave the market.   Finally a             "mature era" prevails, during which a stabilization in both prices and          the number of firms occurs.                                                                                                                                     Previous studies of many industries have found common patterns of               market activity during these three evolutionary stages.  For instance,          during the "growth era" productive capacity increases following an              S-curve whereas output rises at a decreasing rate.  Prices decline              over time at a decreasing rate, and there is a substantial variance in          the length of each stage, and the pattern of diffusion for different            products.                                                                                                                                                       This project applies Bayesian learning models to study the investment           decisions of firms at various stages in the evolutionary process.               These models incorporate uncertainty, typically concerning demand for           the products, time delays between action and the payoff to that                 action, and learning from experience.  The general types of models              include capacity expansion with fixed demand, capacity adjustment with          changing demand, inventory adjustment, and price setting.                       %%%                                                                             This project examines the investment decisions of firms in industries           where new products are introduced.  In the Economics literature,                certain patterns of growth and evolution of new industries have been            postulated theoretically, and verified statistically.  Commencing with          the introduction of the new product, there is a "growth era" during             which existing firms make substantial profits and new producers enter           the market, then follows a "shakeout period" when prices and                    profitability decrease and some firms leave the market.   Finally a             "mature era" prevails, during which a stabilization in both prices and          the number of firms occurs.  These stages have been observed in the             adoption of steam power, diesel locomotives, computers, and in a                general cross-section of new industrial products.                                                                                                               During the evolution of the industry, firms gain more information               about the market in which they are operating, for example demand for            the product, and about the actions of other firms in the same market.           This added information influences the firms' decisions concerning               investment in new production processes, output capacity, and hiring.            Gaining an understanding of the evolutionary process of industries and          the diffusion of new technologies holds the promise of increasing our           knowledge about productivity, investment in research and development,           and industrial innovation.
{'FirstName': 'Rafael', 'LastName': 'Rob', 'EmailAddress': 'rrob@econ.sas.upenn.edu', 'StartDate': '07/01/1989', 'EndDate': None, 'RoleCode': 'Principal Investigator'}
{'Name': 'University of Pennsylvania', 'CityName': 'Philadelphia', 'ZipCode': '191046205', 'PhoneNumber': '2158987293', 'StreetAddress': 'Research Services', 'CountryName': 'United States', 'StateName': 'Pennsylvania', 'StateCode': 'PA'}
{'Code': '1320', 'Text': 'ECONOMICS'}
{'url': 'https://www.nsf.gov/awardsearch/download?DownloadFileName=1988&All=true', 'xml': '8821233.xml'}