Dynamic strategic interaction between an innovating and a non-innovating incumbent
نویسندگان
چکیده
This paper analyzes the effects of product innovation on the firms’ investment behavior in a dynamic duopoly framework. A differential games setting is considered where initially two firms are active on a homogenous product market. One of the firms has an option to introduce a new product that is horizontally and vertically differentiated from the established product. The resulting differential game has three states corresponding to three capital stocks: one for each firm to produce the established product, and one for the innovating firm to produce the new product. We numerically derive Markov perfect equilibria. One of the most remarkable results is that in most cases the noninnovating firm benefits when the other firm carries out the innovation option.The intuition is that, to increase demand for the innovative product, the innovative firm reduces capacity on the established market, which increases the price of the established product and thus the payoff of the non-innovating firm.
منابع مشابه
Evaluating the Growth and Evolution of Facility Management in Innovating Integrating and Aligning Business Strategies to Achieve a Competitive Advantage
The South African Facilities Management (FM) industry has seen increased operational strategy complexity from single-site contractors providing basic janitorial services to highly integrated and bundled FM service providers. Despite these major changes, very little research has been conducted on evaluating the effectiveness of FM in innovating, integrating and aligning business strategies to a...
متن کاملImpacts of Innovating Firms' Strategic signals on Market Participants' Market Success in the Context of a Standards War
To increase the likelihood of success of their market-focused innovations, firms that develop innovations for targeted markets regularly communicate with market participants in order to reduce the uncertainties participants hold regarding the firms’ innovations. Strategic market signals are one of the tactics used by these firms. While an innovating firm’s own signals can have significant impac...
متن کاملFirm heterogeneity, imitation, and the incentives for cost reducing R&D effort
I develop and test a model of strategic cost reducing R&D investments with heterogeneous rivals, where two groups of firms, innovating and non-innovating firms, are distinguished on the basis of their ability to introduce cost reducing innovations and imitate rivals marginal cost improvements. I provide conditions under which entry of a non-innovating rival provides a direct positive incentive...
متن کاملStrategic Alliances, Innovation and Emergence of Organized Proximity
In this paper a model for the formation of strategic alliances is studied. Innovation results from the recombination of knowledge held by the partners to the collaboration, and from the history of their collaboration. Innovation brings partners closer together, while at the same time the repetition of partnerships fosters trust and helps improving the outcome of each round of cooperation. A ten...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید
ثبت ناماگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید
ورودعنوان ژورنال:
- CEJOR
دوره 18 شماره
صفحات -
تاریخ انتشار 2010