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Market Segmentation and the Diffusion of Quality-Enhancing Innovations: The Case of Downhill Skiing

  • James G. Mulligan

    (Department of Economics, University of Delaware, Newark, Delaware)

  • Emmanuel Llinares

    (Department of Economics, University of Delaware, Newark, Delaware)

We report econometric results concerning the diffusion of detachable chairlifts in the United States that provide the first empirical evidence that the adoption of a technological innovation by a firm decreases the likelihood that a local competitor will also adopt it. We model the effect that an innovation in service speed has on a f's incentive to differentiate the quality of its service from that of its competitors. In our model, the incentive to adopt is negatively related to the number of competitors who have already adopted. Our empirical results support this hypothesis. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 85 (2003)
Issue (Month): 3 (August)
Pages: 493-501

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Handle: RePEc:tpr:restat:v:85:y:2003:i:3:p:493-501
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