A rapidly decreasing market

Identifying the least competitive technology in a rapidly decreasing market

In a market that decreases rapidly (at a higher pace than what can be covered by the decrease from regular, planned phasing out of capital equipment), the penetration of modern technology is constrained, since new capacity is not being installed, limiting competition to those suppliers already present. A change in demand for a product in such a market will therefore not affect the installation of modern technology, but will instead affect how quickly and to what extent the existing technology will be decommissioned. The affected suppliers will typically be the least competitive (often using an old technology).

Identifying the least competitive (“old”) technology is therefore important in this situation. However, due to the general increase in population and wealth, the situation of rapidly decreasing markets are currently less common to encounter than the increasing or slowly decreasing markets.

Technology descriptions in engineering handbooks and the like will typically describe how technologies, most often for cost reasons, displace each other over time. Differences in competitiveness of individual suppliers may be deduced from differences in the most important cost factors for the production, be it labour, energy or raw materials.

technological levels - table

Table: Definitions of the terms used to characterise technologies.

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How to cite this: 
Consequential-LCA (2017). A rapidly decreasing market. Last updated: 2017-05-22. www.consequential-lca.org.