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The impact of market size and users' sophistication on innovation: the patterns of demand and the technology life cycle

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Author Info
Marco Guerzoni () (Jena Graduate Academy, Friedrich Schiller University.)

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Abstract

The aim of this paper is an investigation on the role of demand in industrial dynamics. Despite the decades-long debate on demand and innovation, theory still lacks a comprehensive analytical formulation. This paper proposes a model where demand is conceived as a peculiar blend of two conditions, market size, and users' sophistication. These conditions drive firms' incentives to innovate. As main outcome, the paper proposes both a theoretical taxonomy of sectors and an original explanation of technological life cycle.

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Publisher Info
Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers in Economics with number 2007-046.

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Date of creation: 31 Jul 2007
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Handle: RePEc:jrp:jrpwrp:2007-046

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Web page: http://www.jenecon.de

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Related research
Keywords: Innovation; demand; industry life cycle;

Find related papers by JEL classification:
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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