Red Queen Effect

"Red queen effect" is an expression from biology. In biology it can be explained as follows: “The Red Queen effect is an evolutionary hypothesis, which can be used to adapt to the evolution of the environment. This effect can be seen in many areas.” So; suppose a lion lives in the same area and is constantly fed by the same kind of deer (Ceteris paribus). The lion, who hunts in the same area every day, must run faster than the slowest deer every time it is hungry to find food. The deer and region are all the same. However, for each hunting lion, should run faster and spend more energy compared to the old one. Simply put, we can use the following statements: "in this place it takes all the running you can do, to keep in the same place."

We will interpret this effect according to the markets. Based on the definition, this effect can often be seen in areas where competition is intense. E.g. the companies make more invested with the same income to get more customers in nongrowing market. This situation may lead to bankruptcy for companies in the long run while providing an improvement in the market. However, both producers and consumers will benefit from this situation in growing markets. The manufacturer can make a difference and increase its revenue. The consumer can buy better products at cheaper price. With this logic, we need to be better than our father. However, it is useful to consider: Every lion and every deer does not have the same intelligence. Not every company has the same employees and culture. This way, we can deepen the event. But in this case I leave you a comment. In the end, you understand the matter. We can consolidate it with more examples.

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26 Mart 2020 Perşembe

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