Creative Destruction: Incumbent vs. Entrant

This simulation models Schumpeter's "creative destruction": a resource-rich incumbent monopolist defends a highly profitable old technology while a resource-poor entrant fully commits to a maturing disruptive technology from day one. The incumbent's own rational profit motive to protect its existing revenue — cannibalization reluctance — throttles how much of its much larger R&D budget it redirects toward the new technology. Watch how even a small amount of that reluctance is enough for the entrant's fully-committed capability build-up to overtake the incumbent's market share as the new technology matures, despite the incumbent's overwhelming resource advantage at the start.