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Trade-in programs in the context of technological innovation with herding

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  • Paolo Pellizzari

    ()
    (Dept. of Economics, Università Ca' Foscari Venice)

  • Elena Sartori

    ()
    (Dept. of economics, Università Ca' Foscari Venice)

  • Marco Tolotti

    ()
    (Dept. of Management, Università Ca' Foscari Venice)

Abstract

We study optimal pricing strategies and consequent market shares' dynamics in a transition from an old and established technology to a new one. We simulate an agentbased model, in which a large population of possible buyers decide whether to adopt or not depending on prices, private signals and herding behavior. The firm, on its part, sets prices to maximize revenues. We show that trade-in programs, in practice comparable to very aggressive discounts, are supported by a rational attitude.

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Bibliographic Info

Paper provided by Department of Management, Università Ca' Foscari Venezia in its series Working Papers with number 4.

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Length: 15 pages
Date of creation: Apr 2014
Date of revision:
Handle: RePEc:vnm:wpdman:75

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Web page: http://www.unive.it/dip.management
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Related research

Keywords: agent-based models; mobile phone market; random utilities; technology competition; threshold models;

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  1. Brock, William A & Durlauf, Steven N, 2001. "Discrete Choice with Social Interactions," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 235-60, April.
  2. Jean-Pierre Nadal & Denis Phan & Mirta Gordon & Jean Vannimenus, 2005. "Multiple equilibria in a monopoly market with heterogeneous agents and externalities," Quantitative Finance, Taylor & Francis Journals, vol. 5(6), pages 557-568.
  3. Ron Adner & Daniel Levinthal, 2001. "Demand Heterogeneity and Technology Evolution: Implications for Product and Process Innovation," Management Science, INFORMS, vol. 47(5), pages 611-628, May.
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