Product Innovation and Adoption in Market Equilibrium: The Case of Digital Cameras

Juan Esteban Carranza

No 7127, Borradores de Economía y Finanzas from Universidad Icesi

Abstract: This paper contains an empirical dynamic model of supply and demand in the market for digital cameras with endogenous product innovation. On the demand side, heterogeneous consumers time optimally the purchase of goods depending on the expected evolution of prices and characteristics of available cameras. On the supply side, firms introduce new camera models accounting for the dynamic value of new products and the optimal behavior of consumers. The model is estimated using data from the market for digital cameras and the estimated model replicates rich dynamic features of the data. The estimated model is used to perform counterfactual computations, which suggest that more competition or lower product introduction costs generate more product variety but lower average product quality.

Keywords: Durable goods; Dynamic demand; Innovation (search for similar items in EconPapers)
JEL-codes: C30 D10 L10 (search for similar items in EconPapers)
Pages: 50
Date: 2010-06-16
New Economics Papers: this item is included in nep-cmp, nep-com, nep-ind, nep-ino, nep-mic, nep-mkt and nep-tid
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Citations: View citations in EconPapers (27)

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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1624251

Related works:
Journal Article: Product innovation and adoption in market equilibrium: The case of digital cameras (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000130:007127

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