- مبلغ: ۸۶,۰۰۰ تومان
- مبلغ: ۹۱,۰۰۰ تومان
We examine innovation as a market-entry timing game with complete information and observable actions. We characterize all pure-strategy subgame perfect equilibria for the two-player symmetric model allowing both the leader’s and the follower’s payoff functions to be multi-peaked, non-monotonic and discontinuous. We provide sufficient conditions for when the equilibria can be Pareto-ranked and when the equilibrium is unique. Economic applications discussed include process and product innovation and the timing of the sale of an asset.
5. Concluding comments
The decision of when to launch a new product is a critical question for many firms; it can determine profit, firm survival and the shape of markets. More generally, it drives economic development. Given its importance, innovation has received a great deal of attention from economists. We follow in this tradition by studying a market-entry game with complete information, when firms’ actions are observable to all and there is no uncertainty. We characterize all of the pure strategy subgame perfect equilibria for a two-player innovation game when the payoffs can potentially be non-monotonic, multiple-peaked and discontinuous. This new method is relevant in a variety of economic situations; for example, our algorithm can be applied to a product-innovation game with switching costs or when there are discontinuous technological advancements, to process innovation when there is an experience good, and to the timing of the sale of an asset. There can be non-standard payoffs in each of these examples, making them beyond the scope of existing techniques. Our solution method allows us to distinguish between different types of equilibria in this general framework. We provide sufficient conditions that ensure: (i) equilibria can be Pareto ranked, and (ii) the equilibrium is unique.