Product Launches and Buying Frenzies: A Dynamic Perspective

Pascal Courty and Javad Nasiry

No 9462, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Buying frenzies in which a firm intentionally undersupplies a product during its initial launch phase are a common practice within several industries such as electronics (cell phones, video games, game consoles), luxury cars, and fashion goods. We develop a dynamic model of buying frenzies that captures the production and sales of a product over time by the firm and then characterize the conditions under which frenzies are an optimal policy for the firm. We show that buying frenzies occur when customers are sufficiently uncertain about their product valuations and when customers discount the future but not excessively. Further, we propose a measure of

Keywords: Advance selling; Buying frenzy; Customer desperation (search for similar items in EconPapers)
JEL-codes: D4 L2 (search for similar items in EconPapers)
Date: 2013-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://cepr.org/publications/DP9462 (application/pdf)

Related works:
Journal Article: Product Launches and Buying Frenzies: A Dynamic Perspective (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:9462

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP9462

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().