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

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

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.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 29 (2011)
Issue (Month): 6 ()
Pages: 718-728

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Handle: RePEc:eee:indorg:v:29:y:2011:i:6:p:718-728
DOI: 10.1016/j.ijindorg.2011.03.006
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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