EconStor >
Max-Planck-Institut für Ökonomik, Jena >
Papers on Economics and Evolution, MPI für Ökonomik >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/32664
  
Title:Submarket dynamics and innovation: The case of the US tire industry PDF Logo
Authors:Buenstorf, Guido
Klepper, Steven
Issue Date:2009
Series/Report no.:Papers on economics and evolution 0915
Abstract:Beginning in 1922, the rate of exit of U.S. tire producers increased sharply and the industry began a severe and protracted shakeout. Just five years earlier, the tire industry experienced a surge in entry that led to a rise of over 80% in the number of producers. We propose an explanation for this episode based on the idea of industry submarkets, which we incorporate in a model of shakeouts. We test this theory and alternative explanations for the surge in entry and exit and the shakeout using a novel data set on patenting in tires and production in the early 1920s of the cord tire, a key innovation we feature in our theory. Our analysis suggests that the development of a new submarket can open up opportunities for entry but also stimulate innovation and in the process reinforce the advantages of the leading incumbents, accentuating the shakeout of producers.
Subjects:Submarkets
Innovation
Shakeouts
JEL:L65
R12
R30
Document Type:Working Paper
Appears in Collections:Papers on Economics and Evolution, MPI für Ökonomik

Files in This Item:
File Description SizeFormat
617152357.pdf676.76 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/32664

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.