This chapter reviews the rational economic man model and contrasts it with evidence of bounded rationality that has emerged since the last quarter of the previous century. It discusses the implications of bounded rationality for research in industrial economics, with particular attention to the analysis of predation, collusion and entry. It concludes by drawing implications for the antitrust rules toward dominant firm behavior that come out of the Matsushita and Brooke Group decisions.
Creating Business Models with New Forms of Innovation
Stephen Flowers and Martin Meyer
This chapter focuses on the part played by users of technologies and online communities in the creation of new goods and services. Taking as its starting point some of the earliest recorded mentions of innovation by users of technologies, the chapter charts the role of technology users in the invention and innovation of new machines, consumer products and services. It explores how practical people, and not scientists, were at the leading edge of invention and highlights the importance of users’ knowledge and experience in the processes of invention and innovation. The way in which the recent growth of online communities and the crowd is revolutionising the creation and consumption of goods and services is also examined and a series of case studies are used to illustrate the impact of this phenomenon.