THE EFFECT OF TECHNICAL CHANGE ON MARKET STRUCTURE

The paper examines the effects of technical change on market structure. It is found that: 1) the role of independent inventors and small firms is much more important in the early stages of the evolution of a product; 2) the net effect of innovations on entry reverses itself over the product cycle; 3...

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Bibliographic Details
Published in:Economic inquiry 1984-10, Vol.22 (4), p.668-675
Main Authors: GORT, MICHAEL, WALL, RICHARD A.
Format: Article
Language:English
Subjects:
Innovations
Market entry
Product development
Public policy
Technological change
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Summary:The paper examines the effects of technical change on market structure. It is found that: 1) the role of independent inventors and small firms is much more important in the early stages of the evolution of a product; 2) the net effect of innovations on entry reverses itself over the product cycle; 3) there is a shift in the importance of various sources of innovation over the product cycle. The two forces which contribute to this result are: 1) a decline in the importance of innovations as technology matures and 2) the proliferation of products adapted to specialized uses.
ISSN:0095-2583
1465-7295
DOI:10.1111/j.1465-7295.1984.tb00714.x