Spatial Dimension of Lead Markets: Evidences from Diffusion of Photovoltaic Systems in Germany

Diffusion of innovations is a spatial process. Spatial conditions and demand preferences may inducecreation of spatial lead markets before national and international adoptions take place. This paper aimsto extend the Lead Markets concept in a spatial dimension, considering local differences. We firstlydiscuss theoretical underpinnings of the spatial dimension of Lead Markets concept and then apply theconcept to the case of photovoltaic systems’ diffusion in Germany. Based on spatial data and anextensive case study, we show how an innovation is deployed in local areas of a country before beingadopted nationwide. We also apply the system of lead market attributes (demand, price, export,transfer and market structure advantages) to the case and discuss how a local lead market could takeoff in a particular region of a country. Our findings have significant implications not only in theory butalso for practice, providing recommendations for policy makers who seek to enhance the level ofdiffusion for particular innovations.

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