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Dynamic Modeling of the Product Life Cycle in the Commercial Mainframe Computer Market, 1968-1982

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  • Shane M. Greenstein
  • James B. Wade

Abstract

This research investigates product life cycles in the commercial mainframe computer market. We show that empirical studies conducted at the product level are useful for investigating processes underlying product life cycles. We use hazard models with time-varying covariates to estimate the probability of product exit and Poisson models to estimate the probability of introduction. We measure the importance of different aspects of market structure, such as the degree of competitiveness, cannibalization, vintage, product niche and firm effects. We find some evidence of a relationship between the determinants of product exit and product entry.

Suggested Citation

  • Shane M. Greenstein & James B. Wade, 1997. "Dynamic Modeling of the Product Life Cycle in the Commercial Mainframe Computer Market, 1968-1982," NBER Working Papers 6124, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6124
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    1. Ariel Pakes & Paul McGuire, 1994. "Computing Markov-Perfect Nash Equilibria: Numerical Implications of a Dynamic Differentiated Product Model," RAND Journal of Economics, The RAND Corporation, vol. 25(4), pages 555-589, Winter.
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    4. Jovanovic, Boyan & MacDonald, Glenn M, 1994. "The Life Cycle of a Competitive Industry," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 322-347, April.
    5. Cameron, A Colin & Trivedi, Pravin K, 1986. "Econometric Models Based on Count Data: Comparisons and Applications of Some Estimators and Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 29-53, January.
    6. Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-583, June.
    7. Stephen D. Oliner, 1993. "Constant-Quality Price Change, Depreciation, and Retirement of Mainframe Computers," NBER Chapters, in: Price Measurements and Their Uses, pages 19-62, National Bureau of Economic Research, Inc.
    8. Robert J. Gordon, 1987. "The Postwar Evolution of Computer Prices," NBER Working Papers 2227, National Bureau of Economic Research, Inc.
    9. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.),Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908, Elsevier.
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