Berkeley Roundtable on the International Economy

The hearing instruments (hearing aids) industry is typically described as a technologically vigorous area. And yet, in the past 25 years, the structure of the hearing instrument industry has remained surprisingly stable. The article investigates the connection between industry structure and the nature of technology and applies the results on the industry. It is shown that market structure in both the industry and the supplying industries exerts strong influence on the nature of technological development, and that the technology in turn is to a large degree blocking changes in industry structure, especially entry and vertical integration.