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The Impact of Market Size and Users' Sophistication on Innovation: The Patterns of Demand

Economics of Innovation and New Technology V. 19,2 (2010). Pages: 113-126

Posted: 23 Dec 2014 Last revised: 19 Jan 2021

See all articles by Marco Guerzoni

Marco Guerzoni

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Date Written: December 22, 2014

Abstract

The aim of this paper is an investigation on the role of demand upon innovation. Despite the decades-long debate on demand and innovation, theory still lacks an 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 the main outcome, the paper explores the underlying mechanisms of demand-pull theories and proposes a theoretical taxonomy of industries.

Suggested Citation

Guerzoni, Marco, The Impact of Market Size and Users' Sophistication on Innovation: The Patterns of Demand (December 22, 2014). Economics of Innovation and New Technology V. 19,2 (2010). Pages: 113-126, Available at SSRN: https://ssrn.com/abstract=2541675

Marco Guerzoni (Contact Author)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

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