The Stability Of Market Share Patterns In The Semiconductor Industry^∗

^∗The views expressed in this paper are those of the author and do not commit the EIB. I would like to thank Peter Swann and an anonymous referee for helpful comments. The usual disclaimer applies.

Abstract

It is shown that the predictions from a dynamic model of product innovation are consistent with the basic facts observed in the semiconductor memory chip industry. The evolution of market shares for different firms in this industry displays a striking stability over time for different generations of chips. Several other empirical regularities could be observed which conform to the prediction of the model, such as the time profile of prices, sales, and market concentration. Learning by doing and the absence of learning spillovers are deemed as crucial in determining the observed stability of market share patterns.

Keywords:

• Product innovation
• semiconductor industry
• learning by doing
• market structure

^∗The views expressed in this paper are those of the author and do not commit the EIB. I would like to thank Peter Swann and an anonymous referee for helpful comments. The usual disclaimer applies.

^∗The views expressed in this paper are those of the author and do not commit the EIB. I would like to thank Peter Swann and an anonymous referee for helpful comments. The usual disclaimer applies.

Notes

^∗The views expressed in this paper are those of the author and do not commit the EIB. I would like to thank Peter Swann and an anonymous referee for helpful comments. The usual disclaimer applies.