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

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  • Marco Guerzoni

Abstract

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.

Suggested Citation

  • Marco Guerzoni, 2010. "The impact of market size and users' sophistication on innovation: the patterns of demand," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(1), pages 113-126.
    • Handle: RePEc:taf:ecinnt:v:19:y:2010:i:1:p:113-126
    DOI: 10.1080/10438590903016526
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    References listed on IDEAS

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    1. Marco Guerzoni, 2007. "Size and sophistication: the two faces of demand," KITeS Working Papers 197, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jan 2007.
    2. Franco Malerba & Richard Nelson & Luigi Orsenigo & Sidney Winter, 2007. "Demand, innovation, and the dynamics of market structure: The role of experimental users and diverse preferences," Journal of Evolutionary Economics, Springer, vol. 17(4), pages 371-399, August.
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