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Demand and Innovation in Services: the Case of Mobile Communications

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Author Info

  • Nicoletta Corrocher

    (CESPRI - Bocconi University, Milan, Italy and NFH - University of Tromso, Tromso, Norway.)

  • Lorenzo Zirulia

    (CESPRI - Bocconi University, Milan and University of Bologna, Bologna, Italy.)

Abstract

This paper aims at analyzing the characteristics and the determinants of innovation in the mobile communication service industry, by emphasising in particular the role of demand. In a Shumpeterian spirit, we argue that competition in this sector crucially depends upon innovation, and that, given the specific characteristics of the industry, firms' innovative strategies are strongly affected by demand. Our main point is that in a context of uncertainty, demand affects firms' innovative strategies in two ways: first, by providing information on users' behaviour and by increasing the capability of market segmentation; second, by providing invcentives to innovate. This argument is supported by an empirical analysis carried out on the basis of an original dataset including all the tariff plans offered in the history of the Italian market up to 2005. We find that both firms' installed base of customers and market saturation play a role in shaping firms' innovative activities, in terms of number and type of innovations.

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File URL: ftp://ftp.unibocconi.it/pub/RePEc/cri/papers/WP199CorrocherZirulia.pdf
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Bibliographic Info

Paper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 199.

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Length: pages 37
Date of creation: Mar 2007
Date of revision: Mar 2007
Handle: RePEc:cri:cespri:wp199

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Keywords: Service Innovation; Demand Characteristics; Mobile Communications.;

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  12. Schmookler, Jacob, 1962. "Economic Sources of Inventive Activity," The Journal of Economic History, Cambridge University Press, vol. 22(01), pages 1-20, March.
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  19. Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
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Cited by:
  1. Srinuan, Chalita & Srinuan, Pratompong & Bohlin, Erik, 2012. "Exploring mobile pricing strategies and innovations in the Thai mobile communications market," 19th ITS Biennial Conference, Bangkok 2012: Moving Forward with Future Technologies - Opening a Platform for All 72522, International Telecommunications Society (ITS).
  2. Karaçuka, Mehmet & Çatik, A. Nazif & Haucap, Justus, 2012. "Consumer choice and local network effects in mobile telecommunications in Turkey," DICE Discussion Papers 70, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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