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Strategies & Market Trends : Professional Equity Analysis - the Pursuit of True Value
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To: Reginald Middleton who wrote (55)1/30/1997 8:10:00 PM
From: Reginald Middleton   of 102
 
Here is an interesting excerpt from a post in the MSFT vs. NSCP thread:

THE THEORY THAT MADE MICROSOFT
It's called "increasing returns," and it's one of the hottest
and most important ideas in economics today.

pathfinder.com@@TG9GNgQApHjoqo25/fortune/magazine/1996/960429/economy.html

The paragraph below is the concluding one in the article.

Increasing-returnists are not looking for a complete rewrite of economics textbooks, just a few
new chapters. The fact that
increasing returns exists does not mean that diminishing returns doesn't. Far from it. In a
forthcoming article in the Harvard
Business Review, Arthur argues that the two phenomena will always coexist and are
complementary. Most businesses, especially mature ones, from dog food to steel to oil, will
forever remain in the competitive and unforgiving world of diminishing returns. But the new
thinking about increasing returns helps us to understand why the Microsofts, Mercks, and Intels
of the world operate by rules that economists either had long believed impossible or had chosen
to ignore.

If you wish to read some articles by W. Brian Arthur as a starting point to seeing how increasing
returns/positive feedback economics operates then head to the library and pull up these two for a
start.

a) Increasing Returns and the New World of Business

Harvard Business Review July-August 1996
b) Increasing Returns (I think that was the title)

Search in Scientific America 1991 and 1992>
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