Lambertini, Luca ;
Mantovani, Andrea
(2004)
Process and Product Innovation: a Differential Game Approach to Product Life Cycle.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 27.
DOI
10.6092/unibo/amsacta/4761.
In: Quaderni - Working Paper DSE
(529).
ISSN 2282-6483.
Full text available as:
Abstract
We investigate the timing of adoption of product and process innovation by using a differential
game in which firms may invest in both activities. We consider horizontal product
innovation that reduces product substitutability, and process innovation that reduces
marginal cost. First, we demonstrate that the incentive for cost-reducing investment is
relatively higher than the incentive to increase product differentiation. Second, depending
on initial conditions, (i) firms activate both types of investment from the very outset to
the steady state; (ii) firms initially invest only in one R&D activity and then reach the
steady state either carrying out only such activity or carrying out both; (iii) firms do not
invest at all in either type of innovation.
Abstract
We investigate the timing of adoption of product and process innovation by using a differential
game in which firms may invest in both activities. We consider horizontal product
innovation that reduces product substitutability, and process innovation that reduces
marginal cost. First, we demonstrate that the incentive for cost-reducing investment is
relatively higher than the incentive to increase product differentiation. Second, depending
on initial conditions, (i) firms activate both types of investment from the very outset to
the steady state; (ii) firms initially invest only in one R&D activity and then reach the
steady state either carrying out only such activity or carrying out both; (iii) firms do not
invest at all in either type of innovation.
Document type
Monograph
(Working Paper)
Creators
Keywords
product innovation, process innovation, differential games, technology
life cycle
Subjects
ISSN
2282-6483
DOI
Deposit date
15 Mar 2016 09:19
Last modified
15 Mar 2016 09:19
URI
Other metadata
Document type
Monograph
(Working Paper)
Creators
Keywords
product innovation, process innovation, differential games, technology
life cycle
Subjects
ISSN
2282-6483
DOI
Deposit date
15 Mar 2016 09:19
Last modified
15 Mar 2016 09:19
URI
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