Two state capital accumulation with heterogenous products: Disruptive vs non-disruptive goods
Caulkins,J.P. Feichtinger,G. Grass,D. Hartl,R.F. Kort,P.M.
Caulkins,J.P.
Feichtinger,G.
Grass,D.
Hartl,R.F.
Kort,P.M.
Abstract
The paper considers the problem of a firm that, while producing a standard product, has the option to introduce an innovative product. The innovative product competes with the standard product and will therefore reduce revenues of the standard product. A distinction is made between innovative products that do or do not become even more relatively appealing as their market share grows (e.g., because of network externalities). It is shown that in the former case, which we call a “disruptive” good, history dependent long run equilibria can occur, which are in line with recent real life economic examples.
Description
Date
2011
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
SDG 9 - Industry, Innovation, and Infrastructure
Citation
Caulkins, J P, Feichtinger, G, Grass, D, Hartl, R F & Kort, P M 2011, 'Two state capital accumulation with heterogenous products : Disruptive vs non-disruptive goods', Journal of Economic Dynamics & Control, vol. 35, no. 4, pp. 462-478. < http://www.sciencedirect.com/science/article/pii/S0165188910002125 >