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Innovation and Dominant Design in Mobile Telephony

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  • Heli Koski
  • Tobias Kretschmer

Abstract

We document the evolution of product innovation and features in the mobile telephone handset market. We distinguish between two types of product innovation: vertical and horizontal innovation. Using data on mobile telephone handsets from 1990 to 2003, we study the emergence of a dominant design in vertical and horizontal innovations and find that, while vertical product characteristics converged to some extent, no dominant design emerged. For horizontal product characteristics, some horizontal innovations remained differentiated, whereas others were adopted in all new handset models, thus forming a dominant design in horizontal product features. We explain this pattern using the concept of dominant design and results from the theoretical literature on the incentives for horizontal and vertical differentiation.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Industry and Innovation.

Volume (Year): 14 (2007)
Issue (Month): 3 ()
Pages: 305-324

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Handle: RePEc:taf:indinn:v:14:y:2007:i:3:p:305-324

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Related research

Keywords: Product innovation; mobile phone handsets; dominant design; min-max principle;

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References

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  1. Tobias Kretschmer & Katrin Muehlfeld, 2004. "Co-opetition in Standard-Setting: The Case of the Compact Disc," Working Papers 04-14, NET Institute, revised Oct 2004.
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  5. Heli Koski & Tobias Kretschmer, 2004. "Survey on Competing in Network Industries: Firm Strategies, Market Outcomes, and Policy Implications," Journal of Industry, Competition and Trade, Springer, vol. 4(1), pages 5-31, 03.
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  9. Degryse, Hans, 1996. "On the Interaction between Vertical and Horizontal Product Differentiation: An Application to Banking," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 169-86, June.
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  13. Czarnitzki, Dirk & Kraft, Kornelius, 2000. "An empirical test of the asymmetric models on innovative activity: who invests more into R&D - the incumbent or the challenger?," ZEW Discussion Papers 00-10, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  14. Rebecca Henderson, 1993. "Underinvestment and Incompetence as Responses to Radical Innovation: Evidence from the Photolithographic Alignment Equipment Industry," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 248-270, Summer.
  15. Heli Koski & Tobias Kretschmer, 2004. "Competing in Network Industries--A Rejoinder," Journal of Industry, Competition and Trade, Springer, vol. 4(1), pages 67-69, 03.
  16. Geroski, Paul, 2003. "The Evolution of New Markets," OUP Catalogue, Oxford University Press, number 9780199248896, September.
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Cited by:
  1. Koski, Heli & Kretschmer, Tobias, 2009. "New Product Development and Firm Value in Mobile Handset Production," Discussion Papers 1174, The Research Institute of the Finnish Economy.
  2. Koski, Heli & Kretchmer, Tobias, 2009. "The Role of Product Innovation on the Diffusion of Mobile Telephone," Discussion Papers 1200, The Research Institute of the Finnish Economy.

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