Product Innovation and Persistence of Leadership: Theory with Evidence from the Semiconductor Industry
This paper sets out to model the evolution of market shares in the semiconductor industry. The time profile of market shares for different firms in this industry has shown a striking regularity over successive generations of products. In a model of vertical product differentiation three distinct patterns of market shares emerge as an equilibrium outcome, reflecting three distinct strategies in respect of timing of entry into new generations. The main novelty of the model developed here, relative to the existing literature on vertical product differentiation, lies in the incorporation of 'learning by doing'.
|Date of creation:||Jun 1990|
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|Contact details of provider:|| Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp|
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- Jennifer F. Reinganum, 1981. "On the Diffusion of New Technology: A Game Theoretic Approach," Review of Economic Studies, Oxford University Press, vol. 48(3), pages 395-405.
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- Sutton, John, 1986. "Vertical Product Differentiation: Some Basic Themes," American Economic Review, American Economic Association, vol. 76(2), pages 393-98, May.
- Beath, John & Katsoulacos, Yannis & Ulph, David, 1987. "Sequential Product Innovation and Industry Evolution," Economic Journal, Royal Economic Society, vol. 97(388a), pages 32-43, Supplemen.
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