Abstract for: Digital Textile Microfactories in Urban Manufacturing: A Quantitative Analysis on Market Diffusion and Dominance

Digital Textile Microfactories (DTMFs) represent an innovative manufacturing model integrating digital technologies to enhance efficiency, customization, and sustainability in urban textile production. Despite their potential to transform the fashion industry, their diffusion in competitive markets remains uncertain. A key concern is whether network effects and proprietary standards will lead to a dominant platform, limiting competition and innovation. This study examines the diffusion dynamics of DTMFs, focusing on the 'Success to the Successful' archetype, which suggests that market dominance can arise through self-reinforcing advantages. Using a quantitative System Dynamics model, we simulate a duopoly scenario, analyzing the impact of reduced body scanning costs and rewards for complementors on market competition. Simulation results indicate that strategic pricing and investment decisions significantly influence platform dominance. Cost reductions and enhanced complementor incentives strengthen network effects, leading to competitive advantages that may reinforce market concentration. Sensitivity analyses highlight the extent to which pricing strategies and ecosystem diversity shape market outcomes. These findings underscore the role of feedback loops, network effects, and compatibility standards in determining the competitive landscape of DTMFs. The study contributes to the broader discourse on digital innovation in fashion, providing insights for policymakers and business leaders on fostering sustainable and resilient urban production models. Strategic interventions may be required to prevent monopolistic tendencies and encourage a balanced, competitive ecosystem.