|
|||||
|
|
New product introduction and capacity investment by incumbents: Effects of size on strategy |
|
| Authors: | Herbert Dawid Michael Kopel Peter M Kort |
| Institution: | 1. Department of Business Administration and Economics and Center for Mathematical Economics, Bielefeld University, P.O. Box 100131, 33501 Bielefeld, Germany;2. Department of Organization and Economics of Institutions, University of Graz, Austria;3. Department of Econometrics and Operations Research & CentER, Tilburg University, The Netherlands;4. Department of Economics, University of Antwerp, Belgium |
| Abstract: | We analyze a duopoly where capacity-constrained firms offer an established product and have the option to offer an additional new and differentiated product. We show that the firm with the smaller capacity on the established market has a higher incentive to innovate and reaches a larger market share on the market for the new product. An increase in capacity of the larger firm can prevent its competitor from innovating, whereas an increase in capacity of the smaller firm cannot prevent innovation of its larger competitor. In equilibrium the firm with smaller capacity on the established market might outperform the larger firm with respect to total payoffs. |
| Keywords: | Game theory Innovation incentives Capacity choice Multi-product oligopoly Subgame-perfect-equilibrium |
| 本文献已被 ScienceDirect 等数据库收录！ | |