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- W2169684727 abstract "Building on the new theory of industrial concentration, we analyze the relation between market size and product differentiation, and show precisely how product differentiation impacts the sustainability of competitive advantage. Our basic theoretical results highlight that in markets where vertical product differentiation dominates, firms will have an incentive to escalate investment in advertising and/or R&D as market size increases, and thus develop the appropriate necessary competencies. Such (firm-specific) investments will make competitive advantage more sustainable as the firm is less imitable. This will not be the case if the market is primarily characterized by homogeneous products or horizontal product differentiation. Various empirical implications are drawn which are tested using an original dataset of EU industry- and firm-level data for the period 1987-1997. Our empirical results strongly support our developed theory – the degree of market share turbulence increases with market size. However, this relation is weakened by competitive investment in advertising and R&D." @default.
- W2169684727 created "2016-06-24" @default.
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- W2169684727 date "2005-01-01" @default.
- W2169684727 modified "2023-09-24" @default.
- W2169684727 title "Product Differentiation, Turbulence and Sustainability of Competitive Advantage" @default.
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