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Dynamic competition in technological investments: An empirical examination of the LCD panel industry

Jeongsik Lee, Byung-Cheol Kim () and Young-Mo Lim

International Journal of Industrial Organization, 2011, vol. 29, issue 6, 718-728

Abstract: When are technological laggards more likely to try to catch up with leaders? We offer empirical evidence on firm-level data of plant investments in the TFT-LCD panel industry, where technological competition has been intense and dynamic. We find that the followers' level of technology has a non-monotonic effect on technology-improving investments, with intermediate followers the most apt to invest in catch-ups. This result is a puzzle given the existing theory on technology race. We also find that followers' catch-up investments increase with the capacity of the leader that employs the state-of-the-art technology. These results are robust to variations in specification and alternative accounts of effects. We discuss our findings and contributions in light of the technology race literature.

Keywords: LCD industry; Technology race; Leadership competition; Innovation; Catch-up investment; Firm heterogeneity (search for similar items in EconPapers)
JEL-codes: D21 L13 L63 O31 O32 O33 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:29:y:2011:i:6:p:718-728

DOI: 10.1016/j.ijindorg.2011.03.006

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