AbstractThis paper studies the evolution of a competitive industry in which a fixed number of firms reduce costs by innovating and by imitating their rivals' technologies. As the firms' technologies gradually improve, industry output expands and price falls. Technological leaders tend to rely on innovations to reduce their costs, whereas the laggards rely more on imitation. Imitation causes technology to spread from the leaders to the followers and forces some convergence of technology among firms as the industry matures. This convergence is accompanied by faster growth of smaller firms and a consequent tightening of the distribution of output over firms. Copyright 1994 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 102 (1994)
Issue (Month): 1 (February)
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Web page: http://www.journals.uchicago.edu/JPE/
Other versions of this item:
- Jovanovic, B. & Macdonald, G.M., 1988. "Competitive Diffusion," RCER Working Papers 160, University of Rochester - Center for Economic Research (RCER).
- Jovanovic, B. & MacDonald, G.M., 1991. "Competitive Diffusion," Papers 92-08, Rochester, Business - Financial Research and Policy Studies.
- Macdonald, G.M., 1988. "Competitive Diffusion," University of Chicago - Economics Research Center 88-10, Chicago - Economics Research Center.
- Boyan Jovanovic & Glenn MacDonald, 1994. "Competitive Diffusion," NBER Working Papers 4463, National Bureau of Economic Research, Inc.
- Jovanovic, Boyan & MacDonald, Glenn M., 1988. "Competitive Diffusion," Working Papers 88-29, C.V. Starr Center for Applied Economics, New York University.
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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