Product Innovation and Persistence of Leadership: Theory with Evidence from the Semiconductor Industry

48 Pages Posted: 11 Jul 2008

Date Written: June 1990

Abstract

This paper sets out to model the evolution of market shares in the semiconductor industry. The time profile of market shares for different firms in this industry has shown a striking regularity over successive generations of products. In a model of vertical product differentiation three distinct patterns of market shares emerge as an equilibrium outcome, reflecting three distinct strategies in respect of timing of entry into new generations. The main novelty of the model developed here, relative to the existing literature on vertical product differentiation, lies in the incorporation of 'learning by doing'.

Suggested Citation

Gruber, Harald, Product Innovation and Persistence of Leadership: Theory with Evidence from the Semiconductor Industry (June 1990). LSE STICERD Research Paper No. EI02. Available at SSRN: https://ssrn.com/abstract=1158282

Harald Gruber (Contact Author)

European Investment Bank ( email )

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