Interlocking technology and market structure: Stability in the hearing instrument industry

Technology and industry structure are intertwined in complicated ways. So complicated that little research has been carried out on this subject. One of the few dogmas within the field is that rapid technological change is conducive to change in industry structure. This paper analyzes a case for which this proposition does not hold. The investigated industry is a technologically vigorous sector with high R&D intensity. But, little change has taken place in the structure of the industry over the past 25 years. The article describes the industry and its technology and hypothesizes on the possible explanation for this surprising stability, showing how the nature of the technology and the economic organization of the industry and its suppliers hitherto have blocked for radical changes in both realms. JEL classifications: L11, L22, L63, O3