Consumers with Differing Reaction Speeds, Scale Advantages and Industry Structure*

The development of an industry is seen as the outcome of a differential game in which market shares flow in response to price differences. It is hypothesized that while all consumers eventually react to price differences, some are slower than others. If scale advantages have some influence on marginal costs around average market share, then, under reasonable conditions, only st'ewed size distributions can be locally stable steady states. In addition, and contrary to common belief, the largest firm need not eventually monopolize the industry.