E-Commerce

Overlapping Product Life Cycles

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Executive Summary

This paper proposes a model of "Overlapping product life cycles" wherein firm exit is induced by the pursuit of more profitable opportunities elsewhere rather than comparative lack of success within the industry or product line. Every period, a new competitive industry is born that undergoes a predetermined life cycle. At any point in time, there is a collection of industries or product lines in existence of varying ages. There is a continuum of firms that differ in their ability at making the product of any vintage. As an industry evolves, costs of production fall, reducing the productivity gap between high versus low ability firms.

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