Demand and Innovation in Services: the Case of Mobile Communications
This paper aims at analyzing the characteristics and the determinants of innovation in the mobile communication service industry, by emphasising in particular the role of demand. In a Shumpeterian spirit, we argue that competition in this sector crucially depends upon innovation, and that, given the specific characteristics of the industry, firms' innovative strategies are strongly affected by demand. Our main point is that in a context of uncertainty, demand affects firms' innovative strategies in two ways: first, by providing information on users' behaviour and by increasing the capability of market segmentation; second, by providing invcentives to innovate. This argument is supported by an empirical analysis carried out on the basis of an original dataset including all the tariff plans offered in the history of the Italian market up to 2005. We find that both firms' installed base of customers and market saturation play a role in shaping firms' innovative activities, in terms of number and type of innovations.
|Date of creation:||Mar 2007|
|Date of revision:||Mar 2007|
|Contact details of provider:|| Postal: via Sarfatti, 25 - 20136 Milano - Italy|
Web page: http://www.kites.unibocconi.it/
|Order Information:|| Postal: E G E A - via R. Sarfatti, 25 - 20136 Milano -Italy|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:eee:ecolet:v:71:y:2001:i:3:p:413-42 is not listed on IDEAS
- Ron Adner & Daniel Levinthal, 2001. "Demand Heterogeneity and Technology Evolution: Implications for Product and Process Innovation," Management Science, INFORMS, vol. 47(5), pages 611-628, May.
- Valletti, Tommaso M & Cave, Martin, 1998. "Competition in UK mobile communications," Telecommunications Policy, Elsevier, vol. 22(2), pages 109-131, March.
- Eric von Hippel, 1986. "Lead Users: A Source of Novel Product Concepts," Management Science, INFORMS, vol. 32(7), pages 791-805, July.
- Roberto Fontana & Marco Guerzoni, 2008.
"Incentives and uncertainty: an empirical analysis of the impact of demand on innovation,"
Cambridge Journal of Economics,
Oxford University Press, vol. 32(6), pages 927-946, November.
- Roberto Fontana & Marco Guerzoni, 2007. "Incentives and uncertainty: an empirical analysis of the impact of demand on innovation," SPRU Working Paper Series 163, SPRU - Science and Technology Policy Research, University of Sussex.
- Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: I. Overview and Nondiscriminatory Pricing," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 1-37, Spring.
- Miravete, Eugenio, 2007. "The Limited Gains From Complex Tariffs," Working Paper Series 3971, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
- Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, Elsevier.
- Farrell, Joseph & Klemperer, Paul, 2006. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," CEPR Discussion Papers 5798, C.E.P.R. Discussion Papers.
- Farrell, Joseph & Klemperer, Paul, 2006. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Competition Policy Center, Working Paper Series qt9n26k7v1, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Joseph Farrell & Paul Klemperer, 2006. "Co-ordination and Lock-in: Competition with Switching Costs and Network Effects," Economics Papers 2006-W07, Economics Group, Nuffield College, University of Oxford.
- Gruber, Harald & Verboven, Frank, 2001. "The diffusion of mobile telecommunications services in the European Union," European Economic Review, Elsevier, vol. 45(3), pages 577-588, March.
- Gruber, H. & Verboven, F.L., 1998. "The Diffusion of Mobile Telecommunications Services in the European Union," Discussion Paper 1998-138, Tilburg University, Center for Economic Research.
- Gruber, Harald & Verboven, Frank, 1999. "The Diffusion of Mobile Telecommunications Services in the European Union," CEPR Discussion Papers 2054, C.E.P.R. Discussion Papers.
- Gallouj, Faiz & Weinstein, Olivier, 1997. "Innovation in services," Research Policy, Elsevier, vol. 26(4-5), pages 537-556, December.
- Eugenio J. Miravete & Lars-Hendrik Röller, 2004. "Estimating Price-Cost Markups Under Nonlinear Pricing Competition," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 526-535, 04/05.
- Stole, Lars A, 1995. "Nonlinear Pricing and Oligopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(4), pages 529-562, Winter.
- Alwyn Young, 1998. "Growth without Scale Effects," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 41-63, February.
- Saviotti, P. P. & Metcalfe, J. S., 1984. "A theoretical approach to the construction of technological output indicators," Research Policy, Elsevier, vol. 13(3), pages 141-151, June.
- Jean-Jacques Laffont & Patrick Rey & Jean Tirole, 1998. "Network Competition: II. Price Discrimination," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 38-56, Spring.
- Joshua S. Gans & Stephen P. King & Julian Wright, 2005. "Wireless Communications," Monash Economics Working Papers archive-45, Monash University, Department of Economics.
- Schmookler, Jacob, 1962. "Economic Sources of Inventive Activity," The Journal of Economic History, Cambridge University Press, vol. 22(01), pages 1-20, March.
- Pamela D. Morrison & John H. Roberts & Eric von Hippel, 2000. "Determinants of User Innovation and Innovation Sharing in a Local Market," Management Science, INFORMS, vol. 46(12), pages 1513-1527, December.
- Paul Windrum, 2005. "Heterogeneous preferences and new innovation cycles in mature industries: the amateur camera industry 1955--1974," Industrial and Corporate Change, Oxford University Press, vol. 14(6), pages 1043-1074, December.
- Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier.
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters,in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Bruce Tether, 2005. "Do Services Innovate (Differently)? Insights from the European Innobarometer Survey," Industry and Innovation, Taylor & Francis Journals, vol. 12(2), pages 153-184.
- Valletti, Tommaso M., 1999. "A model of competition in mobile communications," Information Economics and Policy, Elsevier, vol. 11(1), pages 61-72, March.
- Eugenio J. Miravete, 2003. "Choosing the Wrong Calling Plan? Ignorance and Learning," American Economic Review, American Economic Association, vol. 93(1), pages 297-310, March.
- von Tunzelmann Nick, 2009. "Competencies Versus Capabilities: A Reassessment," Economia politica, Società editrice il Mulino, issue 3, pages 435-464. Full references (including those not matched with items on IDEAS)