Price competition in the presence of rapid innovation and imitation: the case of digital cameras

S. Thompson

Economics of Innovation and New Technology, 2009, vol. 18, issue 1, 93-106

Abstract: High-tech rivalry typically involves sellers introducing a sequence of models each offering greater capacity/functionality. Given heterogeneous consumers this both creates and erodes any quality/novelty premium as innovation segments the market and imitation then populates the segments so created. We present a hedonic price analysis using a unique US digital camera database. This confirms the intensity of the quality-adjusted price fall and the dominance of vertical differentiation and identifies a premium for frontier models.

Keywords: imitative entry; innovative entry; hedonic pricing (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1080/10438590701672165

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