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Emerging Telecommunications Networks

The International Handbook of Telecommunications Economics, Volume II

Edited by Gary Madden

This major reference work provides a thorough and up-to-date survey and analysis of recent developments in the economics of telecommunications. The Handbook serves both as a source of reference and technical supplement for the field of telecommunications economics.
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Chapter 1: Innovation in advanced telecommunications networks

Cristiano Antonelli


Cristiano Antonelli INTRODUCTION Advanced telecommunications provide an interesting area of analysis for the economics of innovation.1 The rate of technological change in advanced telecommunications since the late 1950s has been rapid. This technical change has led to general-purpose technological systems with a wide scope for application. Further, technological change is characterized by the introduction and market selection of an array of technological innovations, each of which exhibits high levels of complementarity and interrelatedness with different technologies. Such process and organizational innovation also changes the production mix of firms and the composition of their markets. This array of technological innovations is characterized by the complementarity of innovative efforts of a variety of players, each with its own localized field of activity. The emergence of such a cluster of complementary innovations appears to be the outcome of the sequential introduction of interdependent innovations along definable paths shaped by a number of factors. They include complementarities (technological externalities and economies of scope), advantages of learning in specific areas of application; competence accumulated by the dynamics of learning to do and use; and the irreversibility and indivisibility associated with significant portions of the material and immaterial capital structure of existing firms. The next section presents an interpretative framework and considers the role of super-fixed productive factors and the dynamics of accumulation of localized knowledge and competence as the key focusing devices for understanding the market construction of technology change (Appendix A presents the formal model). Following that, the...

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