TY  - JOUR
AU  - Stein,Jeremy C.
TI  - Waves of Creative Destruction: Customer Bases and the Dynamics of       Innovation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4782
PY  - 1994
Y2  - June 1994
UR  - http://www.nber.org/papers/w4782
L1  - http://www.nber.org/papers/w4782.pdf
N1  - Author contact info:
Jeremy C. Stein
Department of Economics
Harvard University
Littauer 209
Cambridge, MA  02138
Tel: 617/496-6455
Fax: 617/496-7352
E-Mail: jeremy_stein@harvard.edu
AB  - 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.
ER  -