Five-Dimensional Markets

Markets move.

We may show the 2012 car market Value (the upper surface of the red space at left, the points deriving that surface omitted), and the Costs for those cars (an estimate shown by the lower red surface of that space).  The region between those surfaces is the Financial Opportunity Space (FOS), where suppliers make Profits.  That market’s matching Demand Frontier (in red) is at right. Electric car Value comes from Horsepower & Range (Dimensions 1 & 2), which determines Price (Dim 3), which drives Demand (Dim 4).

As this market moved into 2013, more entrants joined.  Existing models sales climbed. Over Time (Dim 5), the 2013 Demand Frontier shifted to the blue line.  Simultaneously, the viable profitability region moved too, from the red 2012 to the blue 2013 FOS.  Values changed (Value Space points left out for clarity), and learning on existing models drove their costs lower (the lower blue space surface).  We know costs fall over time for models due to the learning curves that apply to repetitive activities and producers drop prices at the same time to gain market size – see the post from a month ago on the Model T for a real-world example.

The origin of 5D systems is (0,0,0,0,Tn). Tn is a timestamp.

#markets #prices #profits #profitability