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 InfoPaper provided by Chicago - Economics Research Center in its series University of Chicago - Economics Research Center with number 88-10.
Length: 63 pages
Date of creation: 1988
Date of revision:
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research and development ; diffusion of innovations ; railways ; coal mining;
Other versions of this item:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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- Bengt Holmstrom, 1981.
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471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Chari, V V & Hopenhayn, Hugo, 1991. "Vintage Human Capital, Growth, and the Diffusion of New Technology," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1142-65, December.
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