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Beyond Efficiency and Market Shares: Competition within the Finnish Games Industry

CRIC Discussion Paper No. 81

Mirva Peltoniemi

Competition is commonly understood as a process whereby the market shares are reallocated from the less efficient firms towards the more efficient ones. Within the evolutionary framework it is also emphasised that innovation is an important competitive weapon that will allow the firm to escape fierce price competition. The findings from the Finnish games industry suggest that efficiency and market shares are not an insightful way to analyse competition as the market is created by supply rather than demand, the products are far from being perfect substitutes and, as it is a case of steeply increasing returns, the efficiency in game development is not of prime importance. Furthermore, the games industry competes as a group against other industries producing entertainment. The success of a firm is also limited by its ability to acquire resources. Competition within the games industry is about the creation of novelty, but the competitive situation may also restrict it.

Keywords: Competition, evolutionary theory, selection, efficiency, market share, games industry

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CRIC Papers

'Instituted Or Embedded? Legal, Fiscal and Economic Institutionalisation of Markets' by Mark Harvey

'Beyond Efficiency and Market Shares: Competition within the Finnish Games Industry' by Mirva Peltoniemi

'Accounting for Economic Evolution: Fitness and the Population Method' by Stan Metcalfe

'Innovation and Final Consumption: Social Practices, Instituted Modes of Provision and Intermediation' by Andrew McMeekin & Dale Southerton

'Alfred Marshall’s Mecca: Reconciling the Theories of Value and Development' by Stan Metcalfe