A Model of Two-Sided Costly Communication for Building New Product Category Demand
نویسندگان
چکیده
When a rm introduces a radical innovation, consumers are unaware of the product's uses and bene ts. Moreover, consumers are unsure whether they even need the product. In this context, we model the marketing communication process as a two-sided process that involves both rms' and consumers' costly e orts to transmit and assimilate the novel product concept. Its success endogenously generates consumers' need recognition and thereby market demand for a novel product. We study a rm's di erent information disclosure strategies for a radical innovation. We nd that sharing an innovative idea, instead of extracting a higher rent by keeping the idea secret, can be optimal. A rm may bene t from the presence of competitors and their communication e orts. The innovator can share an innovation so that competitors can also pro t and thus have incentives to create and expand the market.
منابع مشابه
Technical Appendix: A Model of Two-Sided Costly Communication for Building New Product Category Demand
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