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The Nature and Effects of Technological Change Over the Industry Life Cycle

  • Darren Filson

    (Claremont Graduate University)

This paper estimates the nature and effects of quality and cost innovations in the early automobile, personal computer, rigid disk drive, computer monitor, and computer printer industries using industry-level data on firm numbers, price, quantity, and quality along with an equilibrium model of industry evolution. The results challenge the notion that new industries experience a pattern of quality innovation early on followed by cost innovation later on. In the four microelectronics industries the rate of quality improvement does not diminish as the industries evolve. The results for the automobilie industry demonstrate that even the when the rate of quality improvement is highest early on, the profitability of quality advantages may be higher later on.

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File URL: http://www.claremontmckenna.edu/rdschool/papers/2000-05.pdf
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Paper provided by Claremont Colleges in its series Claremont Colleges Working Papers with number 2000-05.

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Handle: RePEc:clm:clmeco:2000-05
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  1. Utterback, James M & Abernathy, William J, 1975. "A dynamic model of process and product innovation," Omega, Elsevier, vol. 3(6), pages 639-656, December.
  2. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-53, September.
  3. Jovanovic, B. & MacDonald, G., 1993. "The Life Cycle of a Competitive Industry," Working Papers 93-34, C.V. Starr Center for Applied Economics, New York University.
  4. Stavins, Joanna, 1995. "Model Entry and Exit in a Differentiated-Product Industry: The Personal Computer Market," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 571-84, November.
  5. Steven Klepper & Elizabeth Graddy, 1990. "The Evolution of New Industries and the Determinants of Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 27-44, Spring.
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