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Author: | Javanovic, B. Rob, R. |
Title: | Demand-driven innovation and spatial competition over time. |
Journal: | Review of Economic Studies
1987 : JAN, VOL. 54:177, p. 63-72 |
Index terms: | INNOVATION COMPETITION LOCATION OF INDUSTRY |
Language: | eng |
Abstract: | A model of innovation and spatial competition over time is explored. A key implication is that firm's size is positively autocorrelated across time. The mechanism that generates this persistence works only in heterogeneous-product markets and is based on the idea that larger firms possess better information about the design of future products. Private information about the location of product-demand as the sole explanation for why differences in firm size tend to persist over time is emphasized. Several other avenues of persistence - capital fixity,private information on the cost side,and different firm-endowments of an unobserved fixed factor are excluded. |
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