Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/23383 
Year of Publication: 
2003
Series/Report no.: 
Claremont Colleges Working Papers No. 2003-08
Publisher: 
Claremont McKenna College, Department of Economics, Claremont, CA
Abstract: 
We introduce a racing model with multiple product generations, product innovation, spin-outs, and licensing. Industry conditions and innovation characteristics affect who wins the race and who markets the resulting product. Small firms market their innovations when they pioneer a new generation or improve quality in a young generation and license their innovations in mature generations. If old generation leaders ever market improvements in young generation goods, they do so early on. Leadership in mature generations persists. Tests on the rigid disk drive industry (1977-97) provide empirical support. The results have implications for antitrust policies and policies governing employee non-compete agreements.
Subjects: 
industry dynamics
employee mobility
innovation market
covenant not to compete
spin-offs
JEL: 
L63
L41
K31
O38
O31
Document Type: 
Working Paper

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