IDEAS home Printed from https://ideas.repec.org/a/rje/randje/v36y20052p229-254.html
   My bibliography  Save this article

Disruptive Technologies and the Emergence of Competition

Author

Listed:
  • Ron Adner

    () (INSEAD)

  • Peter Zemsky

    () (INSEAD)

Abstract

We formalize the phenomenon of disruptive technologies that initially serve isolated market niches and, as they mature, alter industry boundaries by displacing established technologies from mainstream segments. Using a model of horizontal and vertical differentiation, we show how the threat of disruption depends on rates of technological advance, how many firms use each technology, relative market segment sizes, and firms' ability to price discriminate. We characterize the effect of disruption on prices, market shares, social welfare, and innovation incentives. We show that the possibility that mergers trigger disruption and thereby alter industry boundaries is important for assessing their impact on social welfare and profits.

Suggested Citation

  • Ron Adner & Peter Zemsky, 2005. "Disruptive Technologies and the Emergence of Competition," RAND Journal of Economics, The RAND Corporation, vol. 36(2), pages 229-254, Summer.
  • Handle: RePEc:rje:randje:v:36:y:2005:2:p:229-254
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ufuk Akcigit & Murat Celik & Daron Acemoglu, 2014. "Young, Restless and Creative: Openness to Disruption and Creative Innovations," 2014 Meeting Papers 377, Society for Economic Dynamics.
    2. repec:bla:stratm:v:38:y:2017:i:5:p:995-1017 is not listed on IDEAS
    3. Westland, J. Christopher & See-To, Eric Wing Kuen, 2007. "The short-run price-performance dynamics of microcomputer technologies," Research Policy, Elsevier, vol. 36(5), pages 591-604, June.
    4. Francisco Ruiz-Aliseda & Jianjun Wu, 2012. "Irreversible Investment in Stochastically Cyclical Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 801-847, September.
    5. Marion Debruyne & David J. Reibstein, 2005. "Competitor See, Competitor Do: Incumbent Entry in New Market Niches," Marketing Science, INFORMS, vol. 24(1), pages 55-66, December.
    6. Zhang, Jun & Guo, Ruey-Shan, 2016. "The D-Day, V-Day, and bleak days of a disruptive technology: A new model for ex-ante evaluation of the timing of technology disruptionAuthor-Name: Chen, Chialin," European Journal of Operational Research, Elsevier, vol. 251(2), pages 562-574.
    7. Grégoire ROTA-GRAZIOSI & Magnus HOFFMANN, 2010. "Endogenous timing game with non-monotonic reaction functions," Working Papers 201017, CERDI.
    8. Funk, Jeffery, 2009. "Components, systems and discontinuities: The case of magnetic recording and playback equipment," Research Policy, Elsevier, vol. 38(7), pages 1192-1202, September.
    9. Reinhardt, Ronny & Gurtner, Sebastian, 2015. "Differences between early adopters of disruptive and sustaining innovations," Journal of Business Research, Elsevier, vol. 68(1), pages 137-145.
    10. Matt Marx & Joshua S. Gans & David H. Hsu, 2014. "Dynamic Commercialization Strategies for Disruptive Technologies: Evidence from the Speech Recognition Industry," Management Science, INFORMS, vol. 60(12), pages 3103-3123, December.
    11. Paul Windrum, 2013. "Multi-agent framework for understanding the success and failure of ServPPINs," Chapters,in: Public–Private Innovation Networks in Services, chapter 4, pages 88-112 Edward Elgar Publishing.
    12. Ashish Sood & Gerard J. Tellis, 2011. "Demystifying Disruption: A New Model for Understanding and Predicting Disruptive Technologies," Marketing Science, INFORMS, vol. 30(2), pages 339-354, 03-04.
    13. Pascal Le Masson & Armand Hatchuel & Benoit Weil, 2010. "Modeling Novelty-Driven Industrial Dynamics with Design Functions: understanding the role of learning from the unknown," Post-Print hal-00696970, HAL.
    14. repec:eee:tefoso:v:126:y:2018:i:c:p:186-193 is not listed on IDEAS
    15. Funk, Jeffrey L. & Magee, Christopher L., 2015. "Rapid improvements with no commercial production: How do the improvements occur?," Research Policy, Elsevier, vol. 44(3), pages 777-788.
    16. Huang, Xiao & Sosic, Greys, 2010. "Analysis of industry equilibria in models with sustaining and disruptive technology," European Journal of Operational Research, Elsevier, vol. 207(1), pages 238-248, November.
    17. Joshua S. Gans, 2014. "Negotiating for the Market," NBER Working Papers 20559, National Bureau of Economic Research, Inc.
    18. Gilbert, Brett Anitra, 2012. "Creative destruction: Identifying its geographic origins," Research Policy, Elsevier, vol. 41(4), pages 734-742.
    19. Schmidt, Arne & Walter, Sascha G. & Walter, Achim, 2010. "Contingency Factors and the Technology-Performance-Relationship in Start-ups," EconStor Preprints 37082, ZBW - German National Library of Economics.

    More about this item

    Keywords

    Market Structure; Firm Strategy; and Market Performance: General Antitrust Policy: General Business Economics: General - market definition; mergers; threat of substitutes;

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rje:randje:v:36:y:2005:2:p:229-254. 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: (). General contact details of provider: http://www.rje.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.