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

Marco Guerzoni ()

No 2007-046, Jena Economics Research Papers from Friedrich-Schiller-University Jena

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.

Keywords: Innovation; demand; industry life cycle (search for similar items in EconPapers)
JEL-codes: L15 O31 O33 (search for similar items in EconPapers)
Date: 2007-07-31
New Economics Papers: this item is included in nep-ino
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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2007-046

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