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Innovation and Dominant Design in Mobile Telephone

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Author Info
Heli Koski
Tobias Kretschmer

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Abstract

ABSTRACT : We document the evolution of product innovation and features in the mobile telephone handset market. We distinguish between two types of product innovation : vertical and horizontal innovation. Using data from 1990 - 2003, we find that some characteristics have subsequently become an industry standard, while some remained as horizontally differentiating features of mobile handsets. We explain this pattern using the concept of dominant design, and results from the theoretical literature on the incentives for horizontal and vertical differentiation

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Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 1012.

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Length: 31 pages
Date of creation: 03 Apr 2006
Date of revision:
Handle: RePEc:rif:dpaper:1012

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Related research
Keywords: Product innovation; mobile phone handsets; dominant design; min-max principle;

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Find related papers by JEL classification:
L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D

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References listed on IDEAS
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.:
  1. Reinganum, Jennifer F, 1983. "Uncertain Innovation and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 73(4), pages 741-48, September. [Downloadable!] (restricted)
    Other versions:
  2. Lehrer, Mark, 2004. "National lead markets and the design competition for 3G network applications," Journal of Business Research, Elsevier, vol. 57(12), pages 1397-1401, December. [Downloadable!] (restricted)
  3. Heli Koski & Tobias Kretschmer, 2004. "Entry, Standards and Competition: Firm Strategies and the Diffusion of Mobile Telephony," Review of Industrial Organization, Springer, vol. 26(1), pages 89-113, November. [Downloadable!] (restricted)
    Other versions:
  4. Tobias Kretschmer & Katrin Muehlfeld, 2004. "Co-opetition in Standard-Setting: The Case of the Compact Disc," Working Papers 04-14, NET Institute, revised Oct 2004. [Downloadable!]
  5. Liikanen, Jukka & Stoneman, Paul & Toivanen, Otto, 2004. "Intergenerational effects in the diffusion of new technology: the case of mobile phones," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1137-1154, November. [Downloadable!] (restricted)
  6. Rosenkranz, Stephanie, 2003. "Simultaneous choice of process and product innovation when consumers have a preference for product variety," Journal of Economic Behavior & Organization, Elsevier, vol. 50(2), pages 183-201, February. [Downloadable!] (restricted)
  7. Rebecca Henderson, 1993. "Underinvestment and Incompetence as Responses to Radical Innovation: Evidence from the Photolithographic Alignment Equipment Industry," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 248-270, Summer. [Downloadable!] (restricted)
  8. Heli Koski & Tobias Kretschmer, 2004. "Survey on Competing in Network Industries: Firm Strategies, Market Outcomes, and Policy Implications," Journal of Industry, Competition and Trade, Springer, vol. 4(1), pages 5-31, 03. [Downloadable!]
  9. Degryse, Hans, 1996. "On the Interaction between Vertical and Horizontal Product Differentiation: An Application to Banking," Journal of Industrial Economics, Blackwell Publishing, vol. 44(2), pages 169-86, June. [Downloadable!] (restricted)
  10. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Blackwell Publishing, vol. 49(1), pages 3-13, January. [Downloadable!] (restricted)
  11. Filson, Darren, 2002. "Product and process innovations in the life cycle of an industry," Journal of Economic Behavior & Organization, Elsevier, vol. 49(1), pages 97-112, September. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Olli Martikainen & Jussi Autere & Markku Nurmela, 2006. "Performance Improvement in Public Organizations, How to Leverage ICT Investments," Discussion Papers 1022, The Research Institute of the Finnish Economy. [Downloadable!]
  2. Kari Alho, 2006. "Climate Policies and Economic Growth," Discussion Papers 1024, The Research Institute of the Finnish Economy. [Downloadable!]
  3. Elad Harison & Heli Koski, 2006. "Innovative Software Business Strategies: Evidence from Finnish Firms," Discussion Papers 1042, The Research Institute of the Finnish Economy. [Downloadable!]
  4. Heli Koski & Tobias Kretchmer, 2009. "The Role of Product Innovation on the Diffusion of Mobile Telephone," Discussion Papers 1200, The Research Institute of the Finnish Economy. [Downloadable!]
  5. Heli Koski & Tobias Kretschmer, 2009. "New Product Development and Firm Value in Mobile Handset Production," Discussion Papers 1174, The Research Institute of the Finnish Economy. [Downloadable!]
  6. Jyrki Ali-Yrkkö, 2006. "Technology Sourcing Through Acquisitions – Do High Quality Patents Attract Acquires?," Discussion Papers 1025, The Research Institute of the Finnish Economy. [Downloadable!]
  7. Jyrki Ali-Yrkkö & Mika Maliranta, 2006. "Impact of R&D on Productivity - Firm-level Evidence from Finland," Discussion Papers 1031, The Research Institute of the Finnish Economy. [Downloadable!]
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