The LCD industry offers several industrial characteristics that are advantageous for studying followers' catch-up investments. LCD panels are produced on glass substrates loaded with transistors and then are integrated into display products such as televisions and monitors. In the industry value chain, the panel fabrication process is the most critical part that determines feasible display size and unit panel cost and hence requires constant R&D and innovation efforts. To effectively respond to the market demand for larger-size displays, LCD panel firms have focused on increasing the size of glass substrates by developing or adopting next-best available substrate technologies.
Hence, the size or the generation of glass substrates serves as an uncontroversial indicator of production technology that enables us to measure technological improvements on an objective standard. Also, because firms that occupy technological leadership positions can enjoy a substantial price premium, the followers have strong incentives to exert substantial R&D efforts to usurp or regain leadership. In fact, no leader persistence exists in this industry; every firm often finds itself running as a follower. Furthermore, since its inception, the LCD panel industry has kept an oligopolistic market structure in which investment outcomes as well as various firm dynamics, such as entries, exits, acquisitions and liquidations, can be easily observed.
The LCD industry offers several industrial characteristics that are
ReplyDeleteadvantageous for studying followers' catch-up investments. LCD
panels are produced on glass substrates loaded with transistors and
then are integrated into display products such as televisions and
monitors.
In the industry value chain, the panel fabrication process is
the most critical part that determines feasible display size and unit
panel cost and hence requires constant R&D and innovation efforts. To
effectively respond to the market demand for larger-size displays, LCD
panel firms have focused on increasing the size of glass substrates by
developing or adopting next-best available substrate technologies.
Hence, the size or the generation of glass substrates serves as an
uncontroversial indicator of production technology that enables us to
measure technological improvements on an objective standard. Also,
because firms that occupy technological leadership positions can enjoy
a substantial price premium, the followers have strong incentives to
exert substantial R&D efforts to usurp or regain leadership. In fact, no
leader persistence exists in this industry; every firm often finds itself
running as a follower.
Furthermore, since its inception, the LCD panel
industry has kept an oligopolistic market structure in which
investment outcomes as well as various firm dynamics, such as
entries, exits, acquisitions and liquidations, can be easily observed.