Model Exit in a Vertically Differentiated Market: Interfirm Competition versus Intrafirm Cannibalization in the Computer Hard Disk Drive Industry
Review of Industrial Organization, 2004, vol. 26, issue 1, 27-59
What characteristics of a product’s local market make its withdrawal more likely? This study investigates the importance of intrafirm “cannibalization” of a product’s demand by products manufactured by the same firm versus interfirm competition from others’ products. While both forces impact product withdrawal, cannibalization has a more robust and significant effect. Hedonic price regressions also reveal higher discounting of older models’ quality-adjusted prices, strengthening the argument for caution when treating list prices as proxies for transaction prices. Copyright Springer 2004
Keywords: differentiated products; exit; hedonic price index; transaction prices; variable hazard rate; withdrawal (search for similar items in EconPapers)
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