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Why innovation policy does not work in Thailand? An economic experiment on product imitation in the Thai society using behavioral game theory

Author

Listed:
  • Ratsuda Rattanasut

    (Chiang Mai University)

  • Komsan Suriya

    (Chiang Mai University)

Abstract

This study constructs an economic experiment using behavioral game theory to investigate factors influencing decisions to imitate industrial products. Players are divided into 2 firms. A firm launches a new product then another firm decides whether to imitate the product as well as to set a new price for the product. The price war continues until a firm sets a final price. After experiencing the whole process, the last firm will make a final decision whether to launch a new product again or not. Findings show that imitation significantly threatens firms in order to launch new products to market. A firm which is able to set the final price tends to imitate. The presence of uncertainty regarding to social pressure from buyers who may refuse to buy imitative products does not play significant role in stopping imitation. The study concludes that imitation naturally takes place in the Thai society without fears of being sanctioned by the society. Therefore, Thailand may not expect its economic prosperity through new product development.

Suggested Citation

  • Ratsuda Rattanasut & Komsan Suriya, 2013. "Why innovation policy does not work in Thailand? An economic experiment on product imitation in the Thai society using behavioral game theory," The Empirical Econometrics and Quantitative Economics Letters, Faculty of Economics, Chiang Mai University, vol. 2(1), pages 87-93, March.
    • Handle: RePEc:chi:journl:v:2:y:2013:i:1:p:87-93
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    More about this item

    Keywords

    Product imitation; price war; social sanction; behavioral game theory; experimental economics;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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