14.5 Equilibrium Conditions
Looking at the Tolsky machine example, it is easy to think that eventually all market shares or state probabilities will be either 0 or 1. This is usually not the case. Equilibrium share of the market values or probabilities are normally encountered. The probabilities are called steady-state probabilities or equilibrium probabilities.
One way to compute the equilibrium share of the market is to use Markov analysis for a large number of periods. It is possible to see if the future values are approaching a stable value. For example, it is possible to repeat Markov analysis for 15 periods for Tolsky’s machine. This is not too difficult to do by hand. The results for this computation appear in Table 14.1.
The machine starts ...
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