installed base and compatibility innovation product preannouncements and predation a good is often more valuable to any user the more others use compatible goods the authors show that this effect may inhibit innovation if an installed base exists and transition to a new standard must be gradual early adopters bear a disproportionate share of transient incompatibility costs this can produce excess inertia the installed base however is stranded if the new standard is adopted this may create excess momentum these dynamic effects have strategic implications temporary price cutting can permanently prevent entry and product preannouncements can be critical in innovation these strategic actions have ambiguous welfare effects

technological expectations and adoption of improved technology abstract attention is focused upon the adoption demand rather than the creation supply of new technology which improves from time to time based on the expected flow of technological progress over which the firm demander has no control it must decide either to adopt the current best available technology or to postpone adoption the distinguishing features of the model are that more than one technological innovation is anticipated and expectations about the likelihood of such innovations are revised as time passes since the last innovation our analysis shows that the firm will adopt the current best practice if its technological lag exceeds a certain threshold moreover as time passes without new technological advances it may become profitable to purchase a technology that has been available even though it was not profitable to do so in the past

bureau competition and inefficiency abstract this paper evaluates the claim that an increase in bureau competition will improve efficiency in the public supply of services it gives explicit consideration to the property rights characteristics of a public sector market and to the role of legislators as active demanders of bureau output rather than as passive monitors of bureau production the analysis demonstrates that bureau managers prefer nonprice competition to price competition a major prediction of the paper is that greater bureau competition may increase bureau output costs and budgets

futures and options markets their new role in eastern europe abstract this paper addresses the new and potential role of futures and options markets in the liberalizing economies of eastern europe the paper begins with a discussion of the value and utility of such markets to the overall economy the paper then examines the advantages of exchange based markets and considers the barriers to development and use of derivative markets in european europe finally we turn to potential for use of western markets as well as the development of local and regional commodities markets in eastern europe

herd behavior the penguin effect and the suppression of informational diffusion an analysis of informational externalities and payoff interdependency this article analyzes a technology adoption process in which the effect of informational spillover interacts with network externalities the interplay of informational externalities and payoff interdependency induces risk averse and clustering behavior in the technology adoption process the analysis differs from the herd behavior literature in focusing on how the herd behavior of subsequent users influences the initial adoption decision moreover herd behavior in this article stems from each agent s desire to inhibit the revelation of new information that can be used in a way detrimental to her rather than from each agent s effort to free ride on information contained in the decisions made by predecessors

technology diffusion and public policy a useful typology of technological change is provided by the schumpeterian trilogy invention the generation of new ideas innovation the development of those ideas through to the first marketing or use of a technology and diffusion the spread of new technology across its potential market until recently policy schemes in most oecd countries have tended to focus predominantly on the invention and innovation or science and r d end of this technology spectrum see e g limpens et al i 992 although it is generally realised that it is the process of diffusion or use of technology that creates productive potential and competitiveness policy initiatives have largely bypassed opportunities to improve the diffusion process if this may seem misplaced emphasis it does in fact reflect the state of the academic literature which is wide ranging and extensive as it relates to policies on r d but small and fragmented as regards policies on diffusion currently a gradual reorientation of policy direction toward diffusion seems to be taking place the us and uk governments for example have recently proposed major technology policy initiatives that despite differences in emphasis both stress the importance of creating an infrastructure conducive to a rapid spread of awareness and knowledge of innovations we argue that although sensible in themselves such policies may be too limited in scope and that a broader policy stance may be needed this paper has two main objectives the first is to provide an overview of why policy intervention in the diffusion process may be desirable and what form it might take this discussion is rather long since to the best of our knowledge there is no published systematic synthesis of the diffusion policy literature though see stoneman i987 for an earlier attempt the second aim is to look at actual diffusion policies and their impacts to make the task manageable we are restricting this paper to a discussion of the diffusion of new process technologies although similar issues apply to new consumer technologies these are not explicitly addressed we also consider diffusion policy only within the context of a given institutional and macroeconomic environment although it may well be that the supply of skilled manpower the nature of the capital market animal spirits and entrepreneurship fiscal and monetary policies will all impact upon the diffusion path improvements in these areas will also impact upon a whole host of other aspects of the economy s performance to use a plea for diffusion policy as a rationale for changes in such areas would be equivalent to the tail wagging the dog and thus they fall outside the remit of this paper

innovation diversity and diffusion a self organisation model a number of features of innovation diffusion are identified appropriability diversity expectations selection learning and spillover externalities a dynamic model is formul ated to embed the diffusion question into a more general framework of disequilibrium competition the model incorporates distinct vintage structures reflecting a change in technological trajectory learning by using a nd expectations driven investment rules of thumb simulation studies reveal robust quasi logistic curves but a complicated pattern of net market share gains and losses uncertainty regarding the rationality of early or late adoption it is argued ensures that the requisite behavioral variety is present to generate these diffusion patterns copyright 1988 by royal economic society

complementarities in organizational design and the diffusion of information technologies an empirical analysis we use a specially designed survey on french firms located in haute savoie to provide empirical evidence suggesting that information and communication technologies adoption is not only influenced by the traditional factors of technology diffusion but also by complementarity effects between strategies organization and information technologies the data collected permitted several advances firstly we could study authentic ict while the recent literature has mainly focused on computer capital stocks or automation tools secondly we constructed measures of the determinants put forward by the models of technology diffusion thirdly we studied three kinds of practices organizational and strategic practices technological choices

the demand for information and the diffusion of a new product abstract the paper examines the implications of the ability of a consumer to learn about the characteristics of a new product on the diffusion of the product over time the demand for information by the consumer is shown to generate a sigmoid diffusion curve for total sales of the product further it is shown that over time the elasticity of demand along the diffusion curve increases

the determinants of technology adoption the case of the banking firm using data on the adoption of automatic teller machines by firms in the banking industry this study examines the relationship between the decision to adopt new technology and its determinants since banking firms differ considerably in terms of the competitive environments in which they operate focusing on this one innovation in this industry allows a stronger test of the relationship between market structure and the adoption of new technology than has been previously conducted using a failure time estimation procedure we find that larger banks and banks operating in more concentrated local banking markets register a higher conditional probability of adopting this new technology all else equal we also find that other results are consistent with the underlying model and that the bank s regulatory environment shapes its adoption decision in plausible ways

bose einstein dynamics and adaptive contracting in the motion picture industry audiences discover what films they like and spread the word information feedback produces bose einstein dynamics in the motion picture box office revenue distribution information cascades generate box office hits and flops the revenue distribution evolves recursively over the run as a mixture of the opening and a stochastic competition among films the motion picture run is decentralized adaptive and self organizing semistationary admission prices local information and contingency rich contracts match the film rental price and the supply of theatrical engagements to demand copyright 1996 by royal economic society

consumption externalities and diffusion in pharmaceutical markets antiulcer drugs we examine the role of consumption externalities in the demand for pharmaceuticals at both the brand level and over a therapeutic class of drugs externalities emerge when use of a drug by others affects its value and or conveys information about efficacy and safety to patients and physicians this can affect the rate of market diffusion for a new entrant and can lead to dominance of one drug despite the availability of close substitutes we use data for h2 antagonist antiulcer drugs to estimate a dynamic demand model and quantify these effects the model has three components an hedonic price equation that measures how the aggregate usage of a drug as well as conventional attributes affect brand valuation equations relating equilibrium market shares to quality adjusted prices and marketing levels and diffusion equations describing the dynamic adjustment process we find that consumption externalities influence both valuations and rates of diffusion and that they operate at the brand and not the therapeutic class level

adverse selection and the middleman the question analyzed in this paper is whether a market that otherwise experiences an akerlofian lemons impasse can function if a middleman organizes trade it is found that the middleman s intervention can prove successful even if neither signals nor quality screening methods exist that could help him to assess the good s qualities the result is obtained under the hypothesis that the middleman randomizes his price offers to the sellers of the units to be intermediated copyright 1989 by the london school of economics and political science

adoption and diffusion of an innovation of uncertain profitability the argument has frequently been made that the pattern of diffusion associated with most new innovations will typically have certain characteristics a diffusion curve for an innovation is usually defined as the proportion of its potential users who have already adopted as a function of time measured from the first adoption many empirical studies by both economists and other social scientists have shown that diffusion curves nearly always have two distinct characteristics i they are s shaped the proportion adopted is an increasing function of time which is initially convex but eventually becomes concave and ii they tend to be right hand skewed the inflection point occurs at a time corresponding to a proportion adopted which is less than one half so that the function is concave over the greatest amount of time in fact this skewing is occasionally severe enough to make the diffusion curve appear concave everywhere the focus of most empirical studies of innovation diffusion has centered on identification of either the major determinants of the speed of diffusion or the characteristics of firms which determine how long they delay adoption the seminal contributions are griliches 6 study of hybrid corn and mansfield s 121 study of 12 industrial innovations these studies and most of the similar ones following conclude that diffusion is faster for innovations with higher profitability and that large firms tend to be the earliest adopters some studies e g mansfield 121 herregat 71 have attempted to ascertain

the dynamic capabilities of firms an introduction an expanded paradigm is needed to explain how competitive advantage is gained and held firms resorting to resource bas ed strategy attempt to accumulate valuable technology assets and employ an aggressive intellectual property stance however winners in the global marketplace have been firms demonstrating timely responsiveness and rapid and flexible product innovation along with the management capability to effectively coordinate and redeploy internal and external competences this source of competitive advantage dynamic capabilities emphasizes two aspects first it refers to the shifting character of the environment second it emphasizes the key role of strategic management in appropriately adapting integrating and re configuring internal and external organizational skills resources and functional competences toward changing environment 3 only recently have researchers begun to focus on the specifics of developing firm specific capabilities and the manner in which competences are renewed to respond to shifts in the business environment the dynamic capabilities approach provides a coherent framework to integrate existing conceptual and empirical knowledge and facilitate prescription this paper argues that the competitive advanis tage of firms stems from dynamic capabilities rooted in high performance routines z operating inside the firm embedded in the firm s processes and conditioned by its history it offers dynamic capabilities as an emerging paradigm of the modern business j firm that draws on multiple disciplines and advances with the help of industry studies in the usa and elsewhere

network externality perspective of feed in tariffs fit instruments some observations and suggestions abstract existing energy policy frameworks revolving around the acceleration of deployment 1 of renewable energy technology can be broadly classified as the quantity vs price approach with this brief viewpoint this paper suggests another perspective of viewing these instruments in terms of a more fundamental basis whether the deployment in capacity is in terms of a cost minimization approach or a network externality approach we suggest that the generic price or feed in tariff fit approach in subsidizing renewable electricity generation and associated income would create a bandwagon or self propagation effect among users rendering the renewable energy technology spreads like a software or information technology our objective is to raise awareness of this technology dynamics oriented perspective in renewable deployment supplementing the conventional installation subsidies perspective we hope that it would inspire more empirical works and studies relating to the policy implications of this viewpoint

innovation adoption and diffusion when there are competing innovations abstract firms face a choice between two innovations without knowing which of the two is better each firm has a prior that one of the innovations is better which is updated by bayes rule as trials with the innovations are made a simple decision rule indicating which innovation should be tried given any posterior is derived and used to define an expected diffusion curve for the better innovation this curve has the commonly observed ogive shape even in the absence of any external demonstration effect when the distribution of firm priors belongs to a general class

competing networks and proprietary standards the case of quadraphonic sound quadraphonic audio systems failed to replace stereo in the 1970s despite backing from all the major manufacturers and recording houses network externalities played a significant role in this episode and the author uses the installed base model of j farrell and g saloner 1986 to explain quad s failure the author finds that the introduction of competing incompatible quadraphonic systems hindered the development of a viable user base and he argues that the systems sponsors introduced their products in a technologically premature state in order to prevent one another from preemptively establishing the quad standard as a result self fulfilling consumer and retailer expectations doomed quadraphonic sound copyright 1990 by blackwell publishing ltd

rank stock order and epidemic effects in the diffusion of new process technologies an empirical model in this article we construct a general duration model of technology adoption that incorporates the main factors discussed in different theories of diffusion of new process technologies the model is applied to data on diffusion of cnc in the uk engineering industry although we find strong evidence in support of rank and endogenous learning effects there seems to be little evidence in support of the stock and order effects the main factors affecting the diffusion of cnc are found to be endogenous learning firm size industry growth rates the cost of the technology and expected changes in the cost of the technology

bureaucrats legislators and the size of government some recent theories have blamed the growth of government on budget maximizing bureaucrats who are assumedly capable of imposing their most preferred budget output combination on legislatures subject to cost and demand constraints however theoretical examination of the range of bargaining outcomes that might occur between bureau and legislature shows that budget maximizing behavior does not necessarily lead to super optimal levels of production nor do the suggested reforms of competition and privatization necessarily improve the situation in this bargaining model the central determinants of governmental growth are not budget maximizing bureaucrats but the legislature s decisions regarding mode of oversight and form of internal organization

human capital information and the early adoption of new technology when producers are uncertain or have imperfect information about the profitability of adopting new technology their adoption behavior depends on the endowment of human capital and the investment in adoption information this study analyzes the role of education experience and information acquisition in the decision to be an early adopter the findings support the hypothesis that adoption decision making is a human capital intensive activity the econometric evidence presented suggests that education and information reduce adoption costs and uncertainty and thereby raise the probability of early adoption adoption behavior is also shown to vary significantly across firm size

costly search and recruiting a labor market model with costly search and recruiting is constructed it incorporates many features found in other models and provides new insights into the effects of externalities and transaction costs the model possesses a continuum of equilibria some of which may be pareto ranked with different rates of unemployment despite the multiplicity of equilibria comparative statics results are obtained copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

learning from the behavior of others conformity fads and informational cascades learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior for example why do people tend to converge on similar behavior why is mass behavior prone to error and fads the authors argue that the theory of observational learning and particularly of informational cascades has much to offer economics business strategy political science and the study of criminal behavior

technological diffusion with social learning this paper attributes the slow diffusion of innovations to an informational externality in the adoption process the profitability of new technologies is uncertain but firing can learn progressively through observing the adoption experience of others given this prospect of social learning every firm would prefer that other firms adopt before it does in the absence of explicit coordination the firms could end up in a sequence of waiting contests this results in staggered adoptions even when all firms are ex ante identical the pace of diffusion is determined endogenously and shown to depend on the characteristics of the innovation copyright 1995 by blackwell publishing ltd

a dynamic analysis of the adoption of a new technology the case of optical scanners two p roportional hazard models are used to investigate the differingeffects of marke t structure variables on the conditional probabilityof a firm initially adoptin g the new technology of optical scanners as the innovation spreads through the f ood store industry during the early stage leading firms with large average sto re size which are not members of chains and which operate in less concentrated m arkets with higher incomes and wage rates tend to adopt scanners sooner later on differences in seller concentration market share and size become less impo rtant as other firms follow prior adoptions copyright 1987 by mit press

the effect of network structure in industrial diffusion processes abstract the development and diffusion of innovations involves groups of organizations with many different roles who interact with each other suppliers adopters third parties etc this paper examines the nature of the communication networks that exist between adopting organizations and from third parties and suppliers to adopters quantitative models of diffusion often assume that information about innovations flows along pre existing links that this information flows from adopters to non adopters directly and that there is perfect mixing in the population i e every actor has an equal chance of communicating with every other actor these are strong assumptions which should be subject to testing we investigate the impact of differing network topologies of communications and alternative models of social contagion on observed adoption patterns network topologies are also extended beyond the focal industry to include suppliers consultants and other customers we use a simulation model to test the effect of departures from traditional assumptions on the diffusion pattern and undertake an empirical field study to examine the prevalence of those departures in one specific industry our simulation findings suggest that network structure can have a substantial effect on the manner in which innovations diffuse while innovation specific communication links and communication through third parties does not change the shape of the penetration trajectory as much as it alters the places in the process where salesforce effort can offer the most leverage the empirical study shows strong evidence of imperfect mixing that both pre existing and innovation specific communication links are used and that communication through third parties may be as important to the diffusion process as direct links from adopters to potential adopters

technology adoption learning spillovers and the optimal duration of patent based monopolies abstract the paper analyses an often overlooked aspect of the patent system namely that a monopoly franchise for production of a new good could lead to a second best welfare optimum event when there was no future prospect of inventions being induced by the patent it is shown that a paten may improve economic welfare relative to a regime of competitive supply when there are learning externalities or spillovers from experience in the process of production comparative statics show that stronger learning effects at low levels of experience tend to strengthen the case for ex post grant of a monopoly franchise

the congressional bureaucratic system a principal agent perspective with applications to the sec this paper provides the theoretical perspective and empirical support for congressional dominance of agency decisions my thesis is twofold first because much of the previous evidence on this question is not evidence at all many scholars intuition and conclusions are based on a logically flawed foundation second i have provided here and in previous work a look at a variety of different agencies and in each case have shown how the events can plausibly be interpreted as involving congress agency problems within the congressional bureaucratic system are real and substantial just as they are within corporations however as in the latter institutional forms develop within the congressional system to partially if not wholly mitigate these problems the logical perspective together with the evidence provide a strong case against the agency dominance hypothesis as typified by the early sections of niskanen 1971 and wilson 1980

coexistence of public and private job agencies screening with heterogeneous institutions in response to the analysis of bureaucracies and the finding of inherent inefficiencies public choice theory argues for an increase in competition by contracting out government services and deregulation the paper explores the effect of coexisting public and private employment services in a model with private information of the worker about her ability and unobservable effort choice the employer s use of an efficient unemployment exchange and an efficient private agency may lead to optimal screening with first best contracts this is due to the assumption that good types of workers lose more human capital than bad types in periods of unemployment or mismatch in contrast to standard screening contracts a bad type of worker earns an information rent if the employment exchange is inefficient but the employer chooses not to use the private agency for good types

optimal bypass and cream skimming this paper develops a normative model of regulatory policy toward bypass and cream skimming it analyzes the effects of bypass on second degree price discrimination on the rent of the regulated firm and on the welfare of low demand customers it shows that pricing under marginal cost may be optimal for the regulated firm excessive cream skimming occurs if access to the bypass technology is not regulated and the prohibition of bypass may increase or decrease the regulated firm s rent jel 026 613 the regulation of natural monopolies is often associated with policies toward competition including restrictions on entry this paper is concerned with a common form of competition which threatens the regulated firm on its most lucrative markets examples abound in the telecommunications industry the development of microwave radio and communication satellites in the 1960 s introduced the possibility that big telecommunication customers might bypass the major common carrier att and the 1978 natural gas policy act in the united states has created the possibility for industrial plants to bypass the local distribution utilities by building direct connections to the pipelines gas producers or intermediaries

emerging value chains within the bio economy structural changes in the case of phosphate recovery abstract the needed transition from a fossil to a bio based economy fosters the utilization of biological resources derived from recycled low value by products and waste streams chain actors face multiple challenges associated with the adoption of novel processing technologies bio based technologies might be related to high switching costs missing downstream processing technologies lack of quality standards missing industry standards emerging regulatory frameworks moreover as previously unrelated actors form new relationships value chains are moving towards new structural changes this paper thus seeks to explore the challenges associated with the emergence of novel value chains with an exploratory case study approach that reviews a new process of recovering phosphate a typical scarce and fundamental resource from rapeseed oil press cakes the contribution of our paper is thus not only to provide conclusions for this specific case but also and more importantly to present a blueprint for other cases of scarce resources that require the establishment of novel supply chains to foster cascading usage of by products expert interviews with different value chain actors have been conducted to investigate arising challenges and derive implications and a further research agenda despite the advantages of the bio based process interviews revealed several challenges associated with the emergence of novel value chains hesitation of respondents in making new investments in terms of equipment and know how missing complementary competencies and difficulties in integrating different industrial sectors to engage in cross industry innovation such as food processing rapeseed oil cakes and specialty chemicals mineral phosphate and its derivatives these exploratory results open the way for some useful recommendations enabling us to propose an agenda for further research and policy development in areas such as development of synergies between academia and industry formulation of management strategies to support the flexibility of firms to capture opportunities associated with by product valorization building a systemic approach at a local level to implement bio based technology clusters

on the positive role of financial intermediation in allocation of venture capital in a market with imperfect information this paper develops a theory of financial intermediation that highlights the contribution of intermediaries as informed agents in a market with imperfect information we consider a venture capital market where the entrepreneurs select the qualities of projects and their perquisite consumptions about which the investors are imperfectly informed it is shown that when all investors have positive search costs the entrepreneurs are induced to offer the unacceptable inferior projects lemons only and the investors will not enter the venture capital market but put their funds in other low return investments an undesirable allocation of resources beginning with an initial undesirable situation the financial intermediaries may evolve as informed agents that induce a pareto preferred allocation leading the investors to a higher welfare state we focus our analysis on the existence of intermediation equilibra when the market for intermediation services is competitive the distribution of returns on projects the fees charged by intermediaries and the fraction of institutional holdings are all endogenous in equilibrium it is shown that i there cannot be a competitive intermediation equilibrium with very high institutional holdings and ii in other cases multiple equilibra may exist but the one with the highest institutional holdings dominates the others in a pareto sense

entry exit and diffusion with learning by doing early entry has the advantage of higher revenues per unit of output early on late entry has the benefit of learning from the experience of earlier entrants and hence lower production costs the advantages are balanced off in a continuous time perfect foresight equilibrium competition generates s shaped diffusion and staggered entry and exit a monopolist will innovate less than a competitive industry but the innovation that he does do he will do sooner copyright 1989 by american economic association

models of technology diffusion abstract the literature on new technology diffusion is vast and it spills over many conventional disciplinary boundaries this paper surveys the literature by focusing on alternative explanations of the dominant stylized fact that the usage of new technologies over time typically follows an s curve the most commonly found model which is used to account for this model is the so called epidemic model which builds on the premise that what limits the speed of usage is the lack of information available about the new technology how to use it and what it does the leading alternate model is often called the probit model which follows from the premise that different firms with different goals and abilities are likely to want to adopt the new technology at different times in this model diffusion occurs as firms of different types gradually adopt it there are actually many ways to generate an s curve and the third class of models which we examine are models of density dependence popularized by population ecologists in these models the twin forces of legitimation and competition help to establish new technologies and then ultimately limit their take up finally we look at models in which the initial choice between different variants of the new technology affect the subsequent diffusion speed of the chosen technology such models often rely on information cascades which drive herd like adoption behaviour when a particular variant is finally selected

the diffusion of new technology and the market for an innovation this article shows that the diffusion of a capital embodied process innovation results from a pattern of decreasing incremental benefits and adoption costs for later adoptions strategic behavior is inessential to this finding we develop a method for comparing diffusion rates for different market structures in the capital equipment market we consider cases with market power on the seller s side of the market and on the buyers side of the market a case with no market power and the welfare optimal case we find that a joint venture adopts an innovation more slowly than other market regimes to protect existing capital investments and that the adoption rate is slower than is socially optimal a monopoly supplier on the other hand adopts at a rate faster than is socially optimal this result is usually also the case when there is no market power finally we show that the monopoly supplier accelerates adoptions faster than in the case where there is no market power but retards later adoptions market power thus makes a difference in diffusion rates and on which side of the market that power lies makes a considerable difference

on the diffusion of new technology a game theoretic approach this paper is an attempt at a rigorous albeit not exceedingly general analysis of the diffusion of new technology in particular consider an industry composed of two firms each using the current best practice technology the firms are assumed to be operating at nash equilibrium output levels generating a market price given demand and profit allocations when a cost reducing innovation is announced each firm must determine when if ever to adopt it based in part upon the discounted cost of implementing the new technology and in part upon the behavior of the rival firm if either firm adopts before the other it can expect to make substantial profits at the expense of the other firm on the other hand the discounted sum of purchase price and adjustment costs may decline with the lengthening of the adjustment period as various quasi fixed factors become more easily variable therefore although waiting costs the firm more in terms of foregone profits it may save money on the cost of purchasing the new technology thus the firm must weigh the costs and benefits of delaying adoption as well as take account of its rival s strategic behavior

employment service public or private this paper deals with the relative performance of private and public employment services for this purpose two behavioral models are developed which take into account that private and and public employment agents not only pursue different aims but also face different restrictions in particular since a public employment agency lacks the right to reject applicants while analysis of the necessary optimality conditions yields tentative conclusions about the advantages and disadvantages of both types of employment service empirically testable hypotheses result from the predicted responses to increases in unemployment and in the cost of service respectively these predicted behaviors are likely to be considered unfair by society causing dissatisfaction with both private and public employment agencies

the cleansing effect of recessions the authors investigate industry response to cyclical variations in demand production units that embody the newest process and product innovations are continuously being created and outdated units are being destroyed although outdated units are the most likely to turn unprofitable and be scrapped in a recession they can be insulated from the fall in demand by a reduction in creation the structure of adjustment costs plays a determinant role in the responsiveness of those two margins the calibrated model matches the relative volatilities of the observed manufacturing job creation and destruction series and their asymmetries over the cycle copyright 1994 by american economic association

demand and supply in new markets diffusion with bilateral learning i explore the endogenous joint evolution of demand and supply in new markets firms and consumers learn in a bayesian fashion by observing the behavior of other firms and consumers respectively as a result endogenous information diffusion takes place on both sides of the market in equilibrium entry occurs in waves and its level depends on two distinct informational effects the model identifies an externality that provides a natural explanation for s shaped diffusion paths entry reveals information to the consumers about the value of the new product and thus early waves of entry affect the expected profitability of subsequent entry