Two state capital accumulation with heterogenous products: Disruptive vs non-disruptive goods

J.P. Caulkins, G. Feichtinger, D. Grass, R.F. Hartl, P.M. Kort

Research output: Contribution to journalArticleScientificpeer-review

6 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)462-478
JournalJournal of Economic Dynamics and Control
Volume35
Issue number4
Publication statusPublished - 2011

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