Why chains beget chains: An ecological model of firm entry and exit and the evolution of market similarity

We construct and analyze a dynamic model of chain growth across multiple markets from an ecological perspective using computational and mathematical techniques. Our model consists of firms that possess intrinsic qualities and hedonic spatial attributes. Consumers purchase from firms based upon quality and hedonic distance. We find that the existence of chains creates an environment favorable to additional chains. In other words, chains beget chains. We also find that even though creating successful new firms becomes harder over time, chaining successful new firms becomes easier. Both phenomena result from the creation of common niches across markets.