This is an example of technological change or technological innovation.
What factors prompt firms to spend on research and development and develop new technologies, new manufacturing processes or new products What are the determinants of technological change at the firm level What are the determinants of the rate and direction of technological change What is the relationship between market structure and technological change What role does technological innovation play in driving economic growth How does the rate of technological change enhance the global competitiveness of different economies These are some of the questions that the subject 'economics of technological change' deal with.
In this paper an attempt has been made to try and answer some of the above questions in the context of the empirical evidence provided by the mobile phone industry in the UK. Since the subject 'economics of technological change' is vast, growing and highly complex (see, for example, Verspagen & Werker, 2003 for an interesting insight to the state of current research on the subject), this paper makes no claim of being either a very rigorous or a very comprehensive attempt at answering these questions. Instead, it is more of a learning exercise where an attempt has been made to study the industrial and market dynamics of the mobile phone industry in the UK with a view to understanding some of the basic economic issues involved in technological change and innovation. As a result, the paper concludes not with a set of unambiguous answers to any set of rigorously stated questions but instead with a few theoretical questions each of which can perhaps be the point of departure for separate dissertations.
1.1. Plan of the paper
Section 2 discusses the state of theoretical knowledge in the subject so as to try and identify some of the more important economic theoretical concepts and issues that are relevant for understanding or explaining technological change in any industry. Section 3 goes on to take a brief look at the mobile phone industry in the UK in terms of the size of the market, number of players in the market, the structure of the market, the rate and direction of technological change in the industry and some forecasts regarding the industry in general and technological change in the industry in particular. Armed with this information, Section 4 makes an attempt to revisit the concepts and issues discussed in the first section to identify which of them are relevant for