On the Dimensionality of Resource Spaces and Market Partitioning

The present paper aims at contributing to the research on market structure evolution by testing the dimensionality explanation advanced by Peli and Nooteboom (1999) in the context of German electricity firms during the period 1999-2011. We contend that, even when the necessary condition of unimodal resource space is not met, the emergence of additional dimensions of consumers’ preferences stimulate the entry of peripheral organizations. The simultaneous co-existence of multiple dimensions of identity differentiation contributed to increase exponentially the space available for the entry of peripheral firms. The contributions of our work to the extant literature are further discussed.