Forthcoming, Industrial and Corporate Change
48 Pages Posted: 30 Sep 2012 Last revised: 14 Jan 2014
Date Written: November 1, 2013
In its first 35 years, the U.S. laser industry was characterized by steady growth in output and the number of producers, whereas subsequently the number of producers steadily declined despite continued growth in the industry’s output. A model of industry evolution that features the creation, destruction, and fusing of independent submarkets is developed to explain these two eras. Data on all laser producers are used to test various implications of the model concerning entry, exit, and innovation. The findings suggest that the emergence of an integrative submarket can fundamentally alter an industry’s market structure and the character of innovation, which is applied to explain historical developments in the evolution of various innovative industries.
Keywords: Submarkets, Shakeouts, Innovation
JEL Classification: L11, O33
Suggested Citation: Suggested Citation
Bhaskarabhatla, Ajay and Klepper, Steven, Latent Submarket Dynamics and Industry Evolution: Lessons from the U.S. Laser Industry (November 1, 2013). Forthcoming, Industrial and Corporate Change. Available at SSRN: https://ssrn.com/abstract=2154554 or http://dx.doi.org/10.2139/ssrn.2154554