A suggested methodology to predicting lead markets

The endogenous side of the model is the lead market potential. The lead market potential is the ability of a county to shape the global dominant design by its domestic preferences and market conditions. The country with the largest lead market potential is expected to become the lead market. The lead market potential is a true latent variable because the lead market potential of countries that finally follow the country that has the largest lead market potential is not observable. The empirical model of the international diffusion of an innovation is that one market leads and all others follow suit. In the lead market theory there is no further distinction within countries that follow, whether they follow earlier or later. There are probably determinants for fast and slow followers but these are not investigated in this thesis. Therefore observation of the exogenous variable would be 1 for the lead market and 0 for all countries that follow. This observation pattern makes it impossible to estimate the influence of the lead market factors on the lead market role of countries unless a sufficient number of ex post lead market cases have been 

Cost reduction potential of design nationally preferred 

Cost reduction per production and accumulated production volume Vintage of capital Trend of factor costs 

Usability of nationally preferred designs abroad Average distance to foreign countries of demand parameters  

Opinion leaders Degree of global increasing returns of adoption 

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