Demand and Innovation in Services: the Case of Mobile Communications
AbstractThis 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 199.
Length: pages 37
Date of creation: Mar 2007
Date of revision: Mar 2007
Contact details of provider:
Postal: via Sarfatti, 25 - 20136 Milano - Italy
Web page: http://www.kites.unibocconi.it/
Postal: E G E A - via R. Sarfatti, 25 - 20136 Milano -Italy
Other versions of this item:
- Corrocher, Nicoletta & Zirulia, Lorenzo, 2010. "Demand and innovation in services: The case of mobile communications," Research Policy, Elsevier, vol. 39(7), pages 945-955, September.
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-23 (All new papers)
- NEP-COM-2007-06-23 (Industrial Competition)
- NEP-INO-2007-06-23 (Innovation)
- NEP-MIC-2007-06-23 (Microeconomics)
- NEP-TID-2007-06-23 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stole, Lars A, 1995. "Nonlinear Pricing and Oligopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(4), pages 529-62, Winter.
- Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: II. Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 38-56, Spring.
- Eugenio J. Miravete, 2003. "Choosing the Wrong Calling Plan? Ignorance and Learning," American Economic Review, American Economic Association, vol. 93(1), pages 297-310, March.
- Gans, Joshua S. & King, Stephen P., 2001.
"Using 'bill and keep' interconnect arrangements to soften network competition,"
Elsevier, vol. 71(3), pages 413-420, June.
- Gans, J.S. & King, S.P., 2000. "Using 'Bill and Keep' Interconnect Arrangements to Soften Network Competiti on," Department of Economics - Working Papers Series 739, The University of Melbourne.
- Joseph Farrell & Paul Klemperer, 2006.
"Co-ordination and Lock-in: Competition with Switching Costs and Network Effects,"
2006-W07, Economics Group, Nuffield College, University of Oxford.
- Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, Elsevier.
- Paul Klemperer & Joseph Farrell, 2006. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Economics Series Working Papers 2006-W07, University of Oxford, Department of Economics.
- Farrell, Joseph & Klemperer, Paul, 2006. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Competition Policy Center, Working Paper Series qt9n26k7v1, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Farrell, Joseph & Klemperer, Paul, 2006. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," CEPR Discussion Papers 5798, C.E.P.R. Discussion Papers.
- Gruber, Harald & Verboven, Frank, 1999.
"The Diffusion of Mobile Telecommunications Services in the European Union,"
CEPR Discussion Papers
2054, C.E.P.R. Discussion Papers.
- Gruber, Harald & Verboven, Frank, 2001. "The diffusion of mobile telecommunications services in the European Union," European Economic Review, Elsevier, vol. 45(3), pages 577-588, March.
- Gruber, H. & Verboven, F.L., 1998. "The Diffusion of Mobile Telecommunications Services in the European Union," Discussion Paper 1998-138, Tilburg University, Center for Economic Research.
- Saviotti, P. P. & Metcalfe, J. S., 1984. "A theoretical approach to the construction of technological output indicators," Research Policy, Elsevier, vol. 13(3), pages 141-151, June.
- Pamela D. Morrison & John H. Roberts & Eric von Hippel, 2000. "Determinants of User Innovation and Innovation Sharing in a Local Market," Management Science, INFORMS, vol. 46(12), pages 1513-1527, December.
- Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier.
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Roberto Fontana & Marco Guerzoni, 2007.
"Incentives and uncertainty: an empirical analysis of the impact of demand on innovation,"
SPRU Working Paper Series
163, SPRU - Science and Technology Policy Research, University of Sussex.
- Roberto Fontana & Marco Guerzoni, 2008. "Incentives and uncertainty: an empirical analysis of the impact of demand on innovation," Cambridge Journal of Economics, Oxford University Press, vol. 32(6), pages 927-946, November.
- Schmookler, Jacob, 1962. "Economic Sources of Inventive Activity," The Journal of Economic History, Cambridge University Press, vol. 22(01), pages 1-20, March.
- Joshua S. Gans & Stephen P. King & Julian Wright, 2005. "Wireless Communications," Development Research Unit Working Paper Series archive-45, Monash University, Department of Economics.
- Eric von Hippel, 1986. "Lead Users: A Source of Novel Product Concepts," Management Science, INFORMS, vol. 32(7), pages 791-805, July.
- Bruce Tether, 2005. "Do Services Innovate (Differently)? Insights from the European Innobarometer Survey," Industry and Innovation, Taylor & Francis Journals, vol. 12(2), pages 153-184.
- von Tunzelmann Nick, 2009. "Competencies Versus Capabilities: A Reassessment," Economia politica, Società editrice il Mulino, issue 3, pages 435-464.
- Gallouj, Faiz & Weinstein, Olivier, 1997. "Innovation in services," Research Policy, Elsevier, vol. 26(4-5), pages 537-556, December.
- Valletti, Tommaso M & Cave, Martin, 1998. "Competition in UK mobile communications," Telecommunications Policy, Elsevier, vol. 22(2), pages 109-131, March.
- 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.
- Ron Adner & Daniel Levinthal, 2001. "Demand Heterogeneity and Technology Evolution: Implications for Product and Process Innovation," Management Science, INFORMS, vol. 47(5), pages 611-628, May.
- Paul Windrum, 2005. "Heterogeneous preferences and new innovation cycles in mature industries: the amateur camera industry 1955--1974," Industrial and Corporate Change, Oxford University Press, vol. 14(6), pages 1043-1074, December.
- Valletti, Tommaso M., 1999. "A model of competition in mobile communications," Information Economics and Policy, Elsevier, vol. 11(1), pages 61-72, March.
- repec:eee:ecolet:v:71:y:2001:i:3:p:413-42 is not listed on IDEAS
- Eugenio J. Miravete & Lars-Hendrik Röller, 2004. "Estimating Price-Cost Markups Under Nonlinear Pricing Competition," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 526-535, 04/05.
- Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
- 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).
- 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).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Valerio Sterzi).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.