Estimating the Innovator's Dilemma: A Dynamic Structural Analysis of the HDD Industry (Dissertation Proposal)

The proposed research analyzes industry evolution with disruptive innovations, in which conventional technologies are replaced by new (but initially inferior) technologies. The goal is to understand the relationship between competition and innovation, for the purpose of designing pro-innovation competition policies. I develop a dynamic industry equilibrium model in which rms can invest in the quality improvement of conventional product and/or new product. The model is applied to the global hard disk drive (HDD) market, which has experienced many cycles of disruptive innovations. Parameters are estimated following Benkard's (2004) approach. Policy experiments (are expected to) indicate that (i) entry restriction, (ii) protectionist trade policy, and (iii) ban on o shoring will all have signi cant negative impact on the pace of innovations.