Estimating the Impact of a Potential Process Innovation and the Optimal Strategy of Licensing
AbstractThis paper explores the implication of a potential quality-improving innovation through its application to digital camera market. It simulates post-innovation prices and sales of cameras and quantitatively estimates the economic impacts of the innovation based on a random coefficient structural model and existing market data. The results show that the potential gain to producers and consumers from the new technology varies substantially depending on the superiority of the technology and the composition of the adopters. The inventor of the innovation benefit more by licensing it to a larger camera maker and profits increase in the number of adopted camera makers.
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Bibliographic InfoPaper provided by School of Economics, La Trobe University in its series Working Papers with number 2009.03.
Length: 53 pages
Date of creation: Oct 2009
Date of revision:
Innovation; Adoption; Product Differentiation; Technology Licensing; Welfare;
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