Author: Luca LambertiniPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Product Innovation Under Vertical Differentiation and the Persistence of Monopoly
Author: Luca LambertiniProduct Innovation Under Vertical Differentiation and the Persistence of Monopoly
Author: Publisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
The incentives to innovate for the incumbent and the entrant in a vertically differentiated market are analised, in the absence of uncertainty. It turns out that if consumers marginal willingness to pay for quality is sufficiently low, the efficiency effect observationally works so as to favour innovation by the entrant, i.e., competition. Otherwise, it operates to the advantage of the incumbent who acquire the right to innovate, preempting thus the rival.
Process and Product Innovation in a Vertically Differentiated Monopoly
Author: Luca LambertiniBetter Late Than Early
Author: Prajit K. DuttaPublisher:
ISBN:
Category : Duopolies
Languages : en
Pages : 42
Book Description
After the initial breakthrough in the research phase of R&D a new product undergoes a process of change, improvement and adaptation to market conditions. We model the strategic behavior of firms in this development phase of R&D. We emphasize that a key dimension to this competition is the innovations that lead to product differentiation and quality improvement. In a duopoly model with a single adoption choice, we derive endogeneously the level and diversity of product innovations. We demonstrate the existence of equilibria in which one firm enters early with a low quality product while the other continues to develop the technology and eventually markets a high quality good. In such an equilibrium, no monopoly rent is dissipated and the later innovator makes more profits. Incumbent firms may well be the early innovators, contrary to the predictions of the hypothesis.
Adoption of a Product Innovation in the Presence of Vertical Product Differentiation
Author: Shiou ShiehPublisher:
ISBN:
Category : Diversification in industry
Languages : en
Pages : 42
Book Description
Product Innovation Incentives
Author: Yongmin ChenPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
In contrast to Arrow's result for process innovations, we show that the gain from a product innovation can be larger to a secure monopolist than to a rivalrous firm that would face competition from independent sellers of the old product. A monopolist incurs profit diversion from its old good but may gain more than a rivalrous firm on the new good by coordinating the prices. In a Hotelling framework, we find simple conditions for the monopolist's gain to be larger. We also explain why the ranking of innovation incentives differs under vertical product differentiation.
Innovation and the Persistence of Monopoly
Author: Steven A. LippmanPublisher:
ISBN:
Category : Research, Industrial
Languages : en
Pages : 20
Book Description
Strategic Vertical Differentiation and Durable Goods Monopoly
Author: Lisa N. TakeyamaPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
This paper considers a novel and strategic use of quality as a means for solving the durable-goods time inconsistency problem. It demonstrates how durable-goods producers can exploit the cannibalization of high-quality markets by low-quality goods. Relative to the static product line solution, this strategic dimension of quality choice implies higher quality levels of low-end goods and the production of some low-end products that would not otherwise be produced. In some cases, low-end goods may rationally be sold below cost. The paper, therefore, offers a purely Coasian explanation for vertical product differentiation.
Product Innovation in a Vertically Differentiated Model
Author: Luigi FilippiniPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
We study the licensing incentives of an independent input producer owning a patented product innovation which allows the downstream ጿirms to improve the quality of their ጿinal goods. We consider a general two-part tariff contract for both outside and incumbent innovators. We ጿind that technology diffusion critically depends on the nature of market competition (Cournot vs. Bertrand). Moreover, the vertical merger with either downstream ጿirm is always privately proijtable and it is welfare improving for large innovations: this implies that not all proijtable mergers should be rejected.
Author: Serge Moresi