The origin of economic niches, conceived as potential markets, has been mostly neglected in economic theory. Ecological niches emerge as new species evolve and fit into a web of interactions, and the more species come into existence, the more (exponentially or power-law distributed) ecological niches emerge. In parallel fashion, economic niches emerge with new goods, and niche formation in economics is also exponentially or power-law distributed. In economics and ecology alike, autocatalytic processes drive the system to greater and greater diversity. Novelty begets novelty in a positive feedback loop. An autocatalytic set of self-enabling transactions feed back upon one another in combinatoric fashion to generate progressive diversity. While these combinatorial dynamics cannot be prestated, the model explains the “hockeystick of economic growth”—a pattern of prolonged stasis followed by a sudden takeoff, such as occurred during the Industrial Revolution or the Cambrian explosion in ecology. Several implications derive from our niche emergence model, including the idea that the evolutionary process of technological change is not something we do; rather, it happens to us.
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Many persons helped us with the ideas in this manuscript. For helpful early conversations and guidance we thank Brian Arthur, Pontus Braunerhuelm, William Butos, Abigail Devereaux, Maryann Feldman, April Franco, David Harper, Anita McGahan, Simon Parker, Mario Rizzo, Mark Sanders, Christian Schade, David Lucas and Igor Matutinovic. None of them is responsible for any errors or infirmities of our analysis.
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Cazzolla Gatti, R., Koppl, R., Fath, B.D. et al. On the emergence of ecological and economic niches. J Bioecon 22, 99–127 (2020). https://doi.org/10.1007/s10818-020-09295-4