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An Economic Analysis of Product Pre-announcements

Author

Listed:
  • Jay Pil Choi
  • Eirik Gaard Kristiansen
  • Jae Nahm

Abstract

In markets with ongoing technological progress, buyers must choose when to buy. These buy/wait decisions may have a significant impact on innovators' and buyers' surpluses. In making these decisions, buyers often rely on information provided by firms. For instance, it is a common practice for firms to announce new products well in advance of actual market availability in information goods industries such as computer software. However, since sellers and buyers, in many cases, have opposing interests, it is difficult for a firm to make credible product pre-announcements. In this paper, we study when and how firms can make credible pre-announcements. We focus particularly on how firms can build a reputation for being honest. We also review the literature on the effects of product pre-announcement on market competition and discuss several open issues in need of further research. (JEL L1, D8)

Suggested Citation

  • Jay Pil Choi & Eirik Gaard Kristiansen & Jae Nahm, 2005. "An Economic Analysis of Product Pre-announcements," CESifo Economic Studies, CESifo Group, vol. 51(2-3), pages 299-319.
    • Handle: RePEc:oup:cesifo:v:51:y:2005:i:2-3:p:299-319.
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    File URL: http://hdl.handle.net/10.1093/cesifo/51.2-3.299
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    Citations

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    Cited by:

    1. Choi, Jay Pil & Kristiansen, Eirik Gaard & Nahm, Jae, 2019. "Strategic Product Pre-announcements in Markets with Network Effects," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 60(1), pages 1-20, June.
    2. K. Sudhir & Ramesh Shankar & Yuan Jin, 2022. "Consumer Guilt and Sustainable Choice: Environmental Impact of Durable Goods Innovation," Cowles Foundation Discussion Papers 2320, Cowles Foundation for Research in Economics, Yale University.
    3. Elie Ofek & Özge Turut, 2013. "Vaporware, Suddenware, and Trueware: New Product Preannouncements Under Market Uncertainty," Marketing Science, INFORMS, vol. 32(2), pages 342-355, March.
    4. Sreya Kolay, 2018. "Tie-in contracts with downstream competition," Quantitative Marketing and Economics (QME), Springer, vol. 16(1), pages 43-77, March.
    5. Ramnath K. Chellappa & Rajiv Mukherjee, 2021. "Platform Preannouncement Strategies: The Strategic Role of Information in Two-Sided Markets Competition," Management Science, INFORMS, vol. 67(3), pages 1527-1545, March.
    6. Ram Rao & Ozge Turut, 2019. "New Product Preannouncement: Phantom Products and the Osborne Effect," Management Science, INFORMS, vol. 65(8), pages 3776-3799, August.
    7. Michelle Y. Lu & Jiwoong Shin, 2018. "A Model of Two-Sided Costly Communication for Building New Product Category Demand," Marketing Science, INFORMS, vol. 37(3), pages 382-402, May.

    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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