Innovation is modeled as a quasi-volcanic monopoly that erodes with imitation.
Evidence
At the heart of Giersch’s new economic geography was what he called the “Schumpeter volcano,” a center of innovation in a specific location, which would provide the innovating company or business unit with a temporary monopoly. Once the innovation “lava” flowed downward and cooled, competitive advantage was lost. The volcano thus must continue producing new innovations (new technologies) or move to the margins in the process of locational competition (Standortwettbewerb). While established “volcanoes” can maintain their position due to incumbency effects, the framework allows for imitation and the possibility of new centers to emerge and successfully compete with existing firms, business units, and regions. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 297
Categorization
- DEFINE: Introduces the ‘Schumpeter volcano’ as Giersch’s core geographic metaphor for temporary innovation monopolies.
- XREF: Contrasts with Joseph Schumpeter’s original theory and connects to Krugman’s new economic geography critique of free trade. — connects to: Imitation among firms can produce either stable niches or disastrous crowding. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1227; Capitalists themselves are compelled to innovate by impersonal market forces — Clara E. Mattei, Escape from Capitalism, 124; Neoliberal thinkers warned that excessive privatization could itself block innovation. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 175 (+1 more)
Broader Connections
- Capitalists themselves are compelled to innovate by impersonal market forces
#expands(0.82) — Clara E. Mattei, Escape from Capitalism, 124 - 3D printing and AI robotics will erode economies-of-scale advantages of conglomerates.
#exemplifies(0.78) — Yanis Varoufakis, Technofeudalism, 643 - Neoliberal thinkers warned that excessive privatization could itself block innovation.
#qualifies(0.75) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 175