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The impact of market size and users' sophistication on innovation: the patterns of demand

  • Marco Guerzoni

The aim of this paper is an investigation on the role of demand upon innovation. Despite the decades-long debate on demand and innovation, theory still lacks an analytical formulation. This paper proposes a model where demand is conceived as a peculiar blend of two conditions, market size, and users' sophistication. These conditions drive firms' incentives to innovate. As the main outcome, the paper explores the underlying mechanisms of demand-pull theories and proposes a theoretical taxonomy of industries.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/10438590903016526
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Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 19 (2010)
Issue (Month): 1 ()
Pages: 113-126

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Handle: RePEc:taf:ecinnt:v:19:y:2010:i:1:p:113-126
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