Reallocating Innovative Resources Around Growth Bottlenecks
Economy-wide increasing returns to scale embodied in a general purpose technology (GPT) and its applications are often a key source of long-run growth. Yet the successful exploitation of increasing returns calls for coordination on a particular technological direction, reducing flexibility and choice ex post and potentially creating a growth bottleneck. We examine how such a growth bottleneck can eventually be overcome under certain key conditions. Demand must be fundamentally diverse so that the original GPT does not serve all demanders. Firms barred from entry into the primary GPT market can then reallocate innovative resources to create new markets to meet the unserved demand. The demand in these new markets must be valuable enough to generate a positive feedback cycle that results in considerable technical advance in the alternative GPT. This ultimately can lead to indirect entry by the alternative GPT into the original GPT market if and when it becomes strong enough to compete with the original GPT. We illustrate the role of this sequence in the two most important technologies for automating white-collar work of the last 50 years.
|Date of creation:||Jul 2010|
|Date of revision:|
|Contact details of provider:|| Postal: 366 Galvez Street, Stanford, California 94305-6015|
Phone: (650) 725-1874
Fax: (650) 723-8611
Web page: http://siepr.stanford.edu
More information through EDIRC
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.:
- Gans, Joshua S. & Stern, Scott, 2003. "The product market and the market for "ideas": commercialization strategies for technology entrepreneurs," Research Policy, Elsevier, vol. 32(2), pages 333-350, February.
- Trajtenberg, M. & Bresnahan, T.F., 1992.
"General Purpose Technologies: "Engines of Growth","
16-92, Tel Aviv.
- Zvi Griliches, 1992. "Introduction to "Output Measurement in the Service Sectors"," NBER Chapters, in: Output Measurement in the Service Sectors, pages 1-22 National Bureau of Economic Research, Inc.
- Griliches, Zvi (ed.), 1992. "Output Measurement in the Service Sectors," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226308852.
- Dosi, Giovanni, 1993.
"Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change,"
Elsevier, vol. 22(2), pages 102-103, April.
- Dosi, Giovanni, 1982. "Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change," Research Policy, Elsevier, vol. 11(3), pages 147-162, June.
- Lipsey, Richard G. & Carlaw, Kenneth I. & Bekar, Clifford T., 2005. "Economic Transformations: General Purpose Technologies and Long-Term Economic Growth," OUP Catalogue, Oxford University Press, number 9780199290895, December.
- Timothy F. Bresnahan, 2002. "Prospects for an Information-Technology-Led Productivity Surge," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 135-162 National Bureau of Economic Research, Inc.
- Gilbert, Richard J, 1992. "Symposium on Compatibility: Incentives and Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 1-8, March.
- Timothy F. Bresnahan & Shane Greenstein & Rebecca M. Henderson, 2011. "Schumpeterian Competition and Diseconomies of Scope: Illustrations from the Histories of Microsoft and IBM," NBER Chapters, in: The Rate and Direction of Inventive Activity Revisited, pages 203-271 National Bureau of Economic Research, Inc.
- Zvi Griliches, 1992. "Output Measurement in the Service Sectors," NBER Books, National Bureau of Economic Research, Inc, number gril92-1, September.
- Farrell, Joseph & Saloner, Garth, 1986. "Standardization and variety," Economics Letters, Elsevier, vol. 20(1), pages 71-74.
When requesting a correction, please mention this item's handle: RePEc:sip:dpaper:09-022. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne Shor)
If references are entirely missing, you can add them using this form.