Heterogeneous preferences and new innovation cycles in mature industries: the camera industry 1955-1974
The paper examines the innovation dynamics of the mature camera market between 1955 and 1974. This highlights the importance of heterogeneous preferences in determining industry structure. By recognising and accommodating consumer heterogeneity, new firms engaged in radical product and process innovation and overcame the first-mover advantages of dominant firms. The case raises important issues for our understanding of industry life cycles. First, a number of innovation cycles are possible over the life cycle. Second, new rounds of entry, exist and market shake-out can occur, with new, innovative entrants displacing old firms. If the new firms are in developing countries then a shift in global production occurs. Third, a basic tenet of Porterian competitive advantage is overturned because success is based on innovation not wage-cost advantages. Fourth, market structure can change, the industry dividing into a number of market niches that contain distinct user groups. Fifth, incremental modular innovations may be adopted by some user groups but not by others. Consequently, incremental product innovations may be adopted in low-priced goods but not in high-priced goods.
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- Terry Baker, 1997. "Quality-adjusted price indexes for portable computers," Applied Economics, Taylor & Francis Journals, vol. 29(9), pages 1115-1123.
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