When to adopt a service innovation: Nash equilibria in a competitive diffusion framework

M. Fazıl Paç, Sergei Savin and Chander Velu

European Journal of Operational Research, 2018, vol. 271, issue 3, 968-984

Abstract: We study the optimal timing of adoption of a service innovation that a new entrant firm brings to a market populated by two incumbent firms. Our analysis is based on a model of competitive diffusion dynamics that extends the monopolistic Bass model to include customer churn processes, as well as a potential market expansion driven by the innovation. We obtain expressions for the time trajectories of the customer bases, i.e., the numbers of customers that use old and new service processes for the competing firms, as well as sharper, closed-form characterizations for the setting with a stable market and homogeneous imitation process.

Keywords: OR in marketing; Optimal adoption timing; Nash equilibrias; Diffusion models (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:271:y:2018:i:3:p:968-984

DOI: 10.1016/j.ejor.2018.05.038

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