User-producer relations, innovation and the evolution of market structures under alternative contractual regimes
AbstractIn this paper we examine the effects that user-producer interactions have on innovation and the dynamics of market structure of two vertically related industries under alternative contractual regimes. The existence of advantages stemming from users-producers relationships introduces a dynamic "matching" problem between firms characterized by heterogeneous capabilities and imperfect information who act in a continuously changing environment but are however able to improve their products also through interactive and interdependent learning processes. Our results highlight the subtle trade-offs and dynamic interdependencies that arise in these contexts. In particular, we show that: (a) a trade-off is present between the exploitation of past experience and the exploration of new suppliers; (b) externalities are present, even if the advantages arising from interactions do not spill over to other firms; (c) imperfect information and agents heterogeneity are crucial factors in determining the consequences of alternative contractual arrangements on industry dynamics; (d) vertical interdependencies propagate the effects of specific firms' decisions across industries and over time, so that the resulting dynamics is characterized by interacting path-dependent processes.
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Bibliographic InfoPaper provided by KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy in its series KITeS Working Papers with number 001.
Length: pages 37
Date of creation: Dec 2009
Date of revision: Dec 2009
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Other versions of this item:
- Malerba, Franco & Orsenigo, Luigi, 2010. "User-producer relations, innovation and the evolution of market structures under alternative contractual regimes," Structural Change and Economic Dynamics, Elsevier, vol. 21(1), pages 26-40, March.
- NEP-ALL-2010-01-16 (All new papers)
- NEP-INO-2010-01-16 (Innovation)
- NEP-TID-2010-01-16 (Technology & Industrial Dynamics)
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