Process and Product Innovation: a Differential Game Approach to Product Life Cycle

Luca Lambertini () and Andrea Mantovani

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We investigate the timing of adoption of product and process innovation by using a differential game in which firms may invest in both activities. We consider horizontal product innovation that reduces product substitutability, and process innovation that reduces marginal cost. First, we demonstrate that the incentive for cost-reducing investment is relatively higher than the incentive to increase product differentiation. Second, depending on initial conditions, (i) firms activate both types of investment from the very outset to the steady state; (ii) firms initially invest only in one R&D activity and then reach the steady state either carrying out only such activity or carrying out both; (iii) firms do not invest at all in either type of innovation.

Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://amsacta.unibo.it/4761/1/529.pdf (application/pdf)

Related works:
Journal Article: Process and product innovation: A differential game approach to product life cycle (2010)
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:bol:bodewp:529

Access Statistics for this paper

More papers in Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna Contact information at EDIRC.
Bibliographic data for series maintained by Dipartimento Scienze Economiche, Universita' di Bologna ().