Does imitation increase or decrease demand for an original product? Understanding the opposing effects of discovery and substitution

Abstract Research Summary This article studies how the entry of an imitative product influences demand for original, in markets with a large number products where consumers are not aware most products. We suggest that release triggers two countervailing forces: discovery effect increases awareness and substitution decreasing demand. When imitation is horizontally differentiated, weaker, leads to increased particularly so when original less well‐known. However, vertically does benefit decreases given effect. test our theory context 3D‐printable Managerial Imitative typically harm performance product. part rationale deterring by acquiring intellectual property (IP) rights. as we demonstrate, may increase product, therefore it. In products, compete attention, serve channel through which attention spills over from original. more pronounced suggests that, under certain conditions, firms pursuing open IP strategy encourages imitation. Examples marketplaces include those music, e‐books, software, mobile apps.