Uncertainty or Spillovers of Product Innovation in Duopoly
Date Issued
2012
Date
2012
Author(s)
Huang, Siao-Wun
Abstract
We analyze two symmetric firms’ adoption of a product innovation in a vertical differentiation model with uncertainty or spillovers. We show that even uncertainty exists, equilibrium outcomes are same as in the certainty situation. Under uncertainty, adoption costs are affected by the successful probability.
On the other hand, with spillovers existing in the model, the equilibrium outcome will be both firms adopting a product innovation as low adoption costs and spillovers relatively high. We find that the learning effect will raise firms’ incentive for the adoption of a product innovation. In particular, the quality gap is most enlarged in this equilibrium. However, there is a kind of equilibrium where the innovating firm produces less quality than the non-innovating firm, when absorbing function which represents the level of spillovers working on firms, is high enough.
Subjects
product innovation
vertical product differentiation
uncertainty
spillovers
technology adoption
SDGs
Type
thesis
File(s)![Thumbnail Image]()
Loading...
Name
ntu-101-R98323019-1.pdf
Size
23.54 KB
Format
Adobe PDF
Checksum
(MD5):9d01cdfcca9f27fcce3d2bc6311f7c31