@techreport{NBERw4782,
 title = "Waves of Creative Destruction: Customer Bases and the Dynamics of       Innovation",
 author = "Jeremy C. Stein",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "4782",
 year = "1994",
 month = "June",
 URL = "http://www.nber.org/papers/w4782",
 abstract = {This paper develops a model of repeated innovation with knowledge spillovers.  The model's novel feature is that firms compete on two dimensions:  1) product quality or cost, where one firm's innovation ultimately spills over to other firms; and 2) distribution costs, where there are no spillovers across firms and where incumbent firms' existing customer bases give them a competitive advantage over would- be entrants.  Customer bases have two important consequences: 1) they can in some circumstances dramatically reduce the long-run average level of innovation; 2) they lead to endogenous bunching, or waves, in innovative activity.},
}