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Dynamic competition in technological investments: An empirical examination of the LCD panel industry

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  • Lee, Jeongsik
  • Kim, Byung-Cheol
  • Lim, Young-Mo

Abstract

When are technological laggards more likely to try to catch up with leaders? We offer empirical evidence on firm-level data of plant investments in the TFT-LCD panel industry, where technological competition has been intense and dynamic. We find that the followers' level of technology has a non-monotonic effect on technology-improving investments, with intermediate followers the most apt to invest in catch-ups. This result is a puzzle given the existing theory on technology race. We also find that followers' catch-up investments increase with the capacity of the leader that employs the state-of-the-art technology. These results are robust to variations in specification and alternative accounts of effects. We discuss our findings and contributions in light of the technology race literature.

Suggested Citation

  • Lee, Jeongsik & Kim, Byung-Cheol & Lim, Young-Mo, 2011. "Dynamic competition in technological investments: An empirical examination of the LCD panel industry," International Journal of Industrial Organization, Elsevier, vol. 29(6), pages 718-728.
  • Handle: RePEc:eee:indorg:v:29:y:2011:i:6:p:718-728 DOI: 10.1016/j.ijindorg.2011.03.006
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:tefoso:v:125:y:2017:i:c:p:166-177 is not listed on IDEAS
    2. B. Douglas Bernheim & Erik Madsen, 2017. "Price Cutting and Business Stealing in Imperfect Cartels," American Economic Review, American Economic Association, vol. 107(2), pages 387-424, February.
    3. repec:wsi:ijimxx:v:21:y:2017:i:04:n:s1363919617500402 is not listed on IDEAS
    4. Yuichi Furukawa, 2015. "Leapfrogging cycles in international competition," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(2), pages 401-433, June.
    5. Hyunbae Chun & Sung-Bae Mun, 2014. "Innovative Activities of an Incumbent and a Potential Entrant: An Empirical Exploration of the Role of Uncertainty in Product and Process Innovations," Working Papers 1406, Research Institute for Market Economy, Sogang University.
    6. Furukawa, Yuichi, 2012. "Perpetual leapfrogging in international competition," MPRA Paper 40126, University Library of Munich, Germany, revised Jul 2012.
    7. Jung, Hyun Ju & Lee, Jeongsik “Jay”, 2014. "The impacts of science and technology policy interventions on university research: Evidence from the U.S. National Nanotechnology Initiative," Research Policy, Elsevier, vol. 43(1), pages 74-91.
    8. Fontana, Roberto & Vezzulli, Andrea, 2016. "Technological leadership and persistence in product innovation in the Local Area Network industry 1990–1999," Research Policy, Elsevier, vol. 45(8), pages 1604-1619.

    More about this item

    Keywords

    LCD industry; Technology race; Leadership competition; Innovation; Catch-up investment; Firm heterogeneity;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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