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Marketing Innovation

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  • Yongmin Chen

Abstract

This paper provides an economic analysis of marketing innovation. A dynamic duopoly model is developed to study two forms of marketing innovation: γ, which allows a firm to acquire consumer information effectively; and σ, which reduces consumer transaction costs. The incentives and effects of marketing innovation differ markedly from those of product or process innovations. Although γ benefits the innovating firm, it hurts some consumers; and, while σ benefits all consumers, it may or may not benefit the innovating firm. Increased competition intensity reduces the value of γ but increases the value of σ. The private incentive is too high for γ but too low for σ.

Suggested Citation

  • Yongmin Chen, 2006. "Marketing Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(1), pages 101-123, March.
    • Handle: RePEc:bla:jemstr:v:15:y:2006:i:1:p:101-123
    DOI: 10.1111/j.1530-9134.2006.00093.x
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    References listed on IDEAS

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