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Competitive Diffusion

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  • Jovanovic, Boyan
  • MacDonald, Glenn M.

Abstract

This paper studies the evolution of a competitive industry in which a fixed number of firms reduce costs by innovating and by imitating their rivals' technologies. As the firms' technologies gradually improve, industry output expands and price falls. Technological leaders tend to rely on innovations to reduce their costs, whereas the laggards rely more on imitation. Imitation causes technology to spread from the leaders to the followers and forces some convergence of technology among firms as the industry matures. This convergence is accompanied by faster growth of smaller firms and a consequent tightening of the distribution of output over firms. Copyright 1994 by University of Chicago Press.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Jovanovic, Boyan & MacDonald, Glenn M., 1988. "Competitive Diffusion," Working Papers 88-29, C.V. Starr Center for Applied Economics, New York University.
  • Handle: RePEc:cvs:starer:88-29
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    More about this item

    Keywords

    economic models ; coal mining ; information ; railways;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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