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The impact of market size and users' sophistication on innovation: the patterns of demand and the technology life cycle

Author

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  • Marco Guerzoni

    () (Jena Graduate Academy, Friedrich Schiller University.)

Abstract

The aim of this paper is an investigation on the role of demand in industrial dynamics. Despite the decades-long debate on demand and innovation, theory still lacks a comprehensive analytical formulation. This paper proposes a model where demand is conceived as a peculiar blend of two conditions, market size, and users' sophistication. These conditions drive firms' incentives to innovate. As main outcome, the paper proposes both a theoretical taxonomy of sectors and an original explanation of technological life cycle.

Suggested Citation

  • Marco Guerzoni, 2007. "The impact of market size and users' sophistication on innovation: the patterns of demand and the technology life cycle," Jena Economic Research Papers 2007-046, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2007-046
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    Keywords

    Innovation; demand; industry life cycle;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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