Product Portfolios and the Introduction of New Products: An Example from the Insecticide Industry

Peter Burton

RAND Journal of Economics, 1994, vol. 25, issue 1, 128-140

Abstract: This article explores how the introduction of new products by multiproduct firms might be affected by existing goods in each firm's portfolio. A logit analysis is conducted to estimate the effects of local monopoly power, cost advantages, and learning. Characteristics theory is used to determine whether the addition of a new product by a firm's existing portfolio creates the potential for local monopoly power. While the chemical similarity of products has the largest effect, results nonetheless indicate the empirical significance of potential monopoly power in influencing product introductions by multiproduct firms.

Date: 1994
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