An Empirical Exploration of a Technology Race
RAND JOURNAL OF ECONOMICS, Vol. 28, No. 2, Summer 1997
Posted: 9 Jul 1997
Abstract
An extensive theoretical literature examines technological competition and, in particular, whether leaders maintain their standing. These models, however, have received little empirical support. I examine innovation in the disk drive industry, an environment particularly conducive to identifying racing behavior. Strategic variables prove significant in explaining the decision to innovate. The patterns are in accord with Reinganum's work: firms that trail the leader innovate more. I add controls for technological opportunity, financing constraints, and firm turnover. When firms manufacture drives for internal use or there are many entrants, and strategic interactions may be less important, the effects are less pronounced.
JEL Classification: L21, L22, O31, L63
Suggested Citation: Suggested Citation