Modeling intercategory and generational dynamics for a growing information technology industry

Publication Type

Journal Article

Publication Date

1-2000

Abstract

Previous studies dealing with product growth have dealt only with substitution effects among successive generations of one product category and not with complementarity and competition provided by related product categories.Based on a broadened concept of the competitive information technology (IT) market, we develop a dynamic market growth model that is able to incorporateboth interproduct categoryand technological substitution effects simultaneously. The market potential for each category or generation is treated as a variable rather than a constant parameter, which is typical of recently growing IT sectors such as wireless telecommunications. The model is calibrated, its plausibility discussed, and its face and predictive validity assessed using data on wireless telecommunications services from two Asian markets.Results show that the market potential (and sales growth) of one category or generation is significantly affected by others and by the overall structure of a geographic market. The model is shown to make relatively good predictions even when the data from recently introduced categories/generations are limited.

Discipline

Business Administration, Management, and Operations

Research Areas

Operations Management

Publication

Management Science

Volume

46

Issue

4

First Page

496

Last Page

512

ISSN

0025-1909

Identifier

10.1287/mnsc.46.4.496.12059

Publisher

INFORMS

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