Durable-goods monopoly with endogenous innovation

Research output: Contribution to journalArticle

19 Citations (Scopus)

Abstract

While selling an existing product, a durable-goods monopolist may develop a new, improved product. The firm must consider the interaction between its intertemporal pricing and research and development (R&D) decisions. The interactions show a sharp dichotomy depending on pricing regimes. When it is optimal for the firm to continue to sell the old model along with the new model, the interactions disappear. However, when it is optimal for the firm to discontinue the sale of the old model after introducing the new model, the firm will face a time-inconsistency problem in its R&D decision.

Original languageEnglish
Pages (from-to)303-319
Number of pages17
JournalJournal of Economics and Management Strategy
Volume13
Issue number2
DOIs
Publication statusPublished - 2004 Jun

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Strategy and Management
  • Management of Technology and Innovation

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