Technological Innovation and Market Turbulence: The Dot-com Experience
This paper explains market turbulence, such as the recent dot-com boom/bust cycle, as equilibrium industry dynamics driven by the synergy between new and existing technologies. When a major technological innovation arrives, a wave of new firms implement the innovation and enter the market. However, if the innovation complements existing technology, some new entrants later will be forced out as more and more incumbent firms succeed in adopting the innovation. It is argued that the diffusion of internet technology among traditional brick-and-mortar firms was indeed the driving force behind the rise and fall of dot-coms as well as the sustained growth of e-commerce. Systematic empirical evidence from retail and banking industries supports the theoretical findings. (Copyright: Elsevier)
Volume (Year): 10 (2007)
Issue (Month): 1 (January)
|Contact details of provider:|| Postal: Marina Azzimonti, Department of Economics, Stonybrook University, 10 Nicolls Road, Stonybrook NY 11790 USA|
Web page: http://www.EconomicDynamics.org/red/
More information through EDIRC
|Order Information:|| Web: https://www.economicdynamics.org/subscription-information/ Email: |
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.:
- Rafael Rob, 1991. "Learning and Capacity Expansion under Demand Uncertainty," Review of Economic Studies, Oxford University Press, vol. 58(4), pages 655-675.
- Dilip Abreu & Markus K. Brunnermeier, 2003.
"Bubbles and Crashes,"
Econometric Society, vol. 71(1), pages 173-204, January.
- Stephen F. Le Roy, 2004. "Rational Exuberance," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 783-804, September.
- Eli Ofek & Matthew Richardson, 2003. "DotCom Mania: The Rise and Fall of Internet Stock Prices," Journal of Finance, American Finance Association, vol. 58(3), pages 1113-1138, 06.
- Jovanovic, Boyan & MacDonald, Glenn M, 1994.
"The Life Cycle of a Competitive Industry,"
Journal of Political Economy,
University of Chicago Press, vol. 102(2), pages 322-347, April.
- Boyan Jovanovic & Glenn MacDonald, 1993. "The Life-Cycle of a Competitive Industry," NBER Working Papers 4441, National Bureau of Economic Research, Inc.
- Jovanovic, B. & MacDonald, G., 1993. "The Life Cycle of a Competitive Industry," Working Papers 93-34, C.V. Starr Center for Applied Economics, New York University.
- Jovanovic, B. & MacDonald, G.M., 1992. "The Life-Cycle of Competitive Industry," Papers 92-09, Rochester, Business - Financial Research and Policy Studies.
- Robert DeYoung, 2005. "The Performance of Internet-Based Business Models: Evidence from the Banking Industry," The Journal of Business, University of Chicago Press, vol. 78(3), pages 893-948, May.
- Paul Gompers & Anna Kovner & Josh Lerner & David Scharfstein, 2005.
"Venture Capital Investment Cycles: The Impact of Public Markets,"
NBER Working Papers
11385, National Bureau of Economic Research, Inc.
- Gompers, Paul & Kovner, Anna & Lerner, Josh & Scharfstein, David, 2008. "Venture capital investment cycles: The impact of public markets," Journal of Financial Economics, Elsevier, vol. 87(1), pages 1-23, January.
- Lubos Pastor & Pietro Veronesi, 2004.
"Was There a Nasdaq Bubble in the Late 1990s?,"
NBER Working Papers
10581, National Bureau of Economic Research, Inc.
- Boyan Jovanovic, 2004.
2004 Meeting Papers
91, Society for Economic Dynamics.
- Horvath, Michael & Schivardi, Fabiano & Woywode, Michael, 2001. "On industry life-cycles: delay, entry, and shakeout in beer brewing," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1023-1052, July.
- Zeira, Joseph, 1999.
"Informational overshooting, booms, and crashes,"
Journal of Monetary Economics,
Elsevier, vol. 43(1), pages 237-257, February.
- Garber, Peter M, 1990. "Famous First Bubbles," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 35-54, Spring.
- Richard J. Sullivan & Zhu Wang, 2013.
"Internet banking: an exploration in technology diffusion and impact,"
13-10, Federal Reserve Bank of Richmond.
- Richard J. Sullivan & Zhu Wang, 2005. "Internet banking: an exploration in technology diffusion and impact," Payments System Research Working Paper PSR WP 05-05, Federal Reserve Bank of Kansas City.
- Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-583, June.
- Zhu Wang, 2006. "Learning, diffusion and the industry life cycle," Payments System Research Working Paper PSR WP 04-01, Federal Reserve Bank of Kansas City.
- repec:ntj:journl:v:53:y:2000:i:n._3:p:373-84 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:red:issued:06-47. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann)
If references are entirely missing, you can add them using this form.