Innovation, Components, and Complements.pptVIP

Innovation, Components, and Complements Hal R. Varian UC Berkeley May 2008 Stylized facts about innovation Importance of simultaneous innovation Critical role of Components Complements Standards These forces are still critically important today Simultaneous innovation Historical Howe/Singer and sewing machine … Edison/Swan and electric light… Bell/Gray and telephone… Recent Digital computer Personal computer Dot coms Why simultaneous innovation? Demand side Recognized problem and/or need Problem seems solvable Supply side Standardized components Parallel experimentation “Combinatorial innovati