We develop a model of firm size in which firms are unable to access as many consumers as they want. Nwely arrived consumers match randomly with firms. Subsequently consumers must pay "search costs"to be able to switch firms.

In this paper we exmine the dynamic resolution of technological adoption in "hardware/software" systems. We are interested in determinig to what extent software availability affects hardware sales and/or vice-versa. We fi rst develop a dynamic model for estimating demand when costs (and hence...