The demand-lead effect

In the third case of the time-lead effect, users in the lead market have a higher benefit of q2 than other countries because of differences in social habits, taste, culture, ecological conditions, political structure or other circumstances. The utility function for qj and can be written as 

In these case, a lead market is a country that has the ability to change preferences in other markets. In the mobile communication example, a country that is often imitated could have initiated the mobile telephony boom. It just became hip in countries with a dense fixed line telephone net to use mobile phones instead, despite its doubtful additional real benefit. Real benefit of goods and therefore preferences, however, can change with working conditions and lifestyle. Increasing mobility, environmental pollution, and female work participation are global trends that change the preferences of consumers as well as industrial users. 

A trend is the internationalisation mechanism of a nationally preferred innovation. A lead market can also become the lead market when it just happens to have a high benefit from an innovation design because of the special context e.g. a low density of population makes it more profitable to adopt mobile telephones instead of fixed line telephones. 

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Figure 3-7 The three types of a demand-lead effect...

When demand preferences, the market context and other factors of the propensity to adopt innovations do not vary considerably, however, and technical solutions are mainly based on scientific findings, e.g. in biotechnological pharmaceuticals, one can argue that the effectiveness of the science and technology transfer system of a country would be the dominant lead characteristic of a country. Only in this extreme setting is the main lead effect the scientific advantage of a country. 

It IS estimated that more than 80 percent of the American population has flown at least once if that is true, it is effectively a fully mature market. Outside the United States, the demand for air travel is expanding as well, although it has been tempered by economic dotvnturns, particularly in the Asian market. These factors are leading Airbus and Boeing to the conclusion that there will exist a need for an aircraft larger than any now flying. They differ, however, on the question of when that aircraft will be needed and what form it should take. 

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