34 Pages Posted: 31 Dec 2009 Last revised: 30 Mar 2013
Date Written: December 30, 2009
Network effects play a central role in many information goods industries including electronics and software. So far, however, their role in shaping biotechnology innovation has largely been overlooked. This paper presents data documenting the presence of strong network effects in stem cell research. We also present survey evidence that researchers strongly prefer to work with cells that others have used in the past. We present a simple model of this process. Our model predicts that the dominance of particular cell lines should - unlike software or electronics - slowly erode over time. Our stem cell data support this prediction.
Keywords: network effects, learning spill-overs, biology, stem cells
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