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Product Innovation And Imperfect Competition In The Italian Fruit-Drink Industry

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  • Russo, Carlo
  • Cardillo, Concetta
  • Perito, Maria Angela

Abstract

In this paper, the case of the Italian fruit-drink industry is presented to discuss the strategic issues of product-innovation in imperfectly competitive markets. In particular, three main topics are addressed: the incentives to the adoption of innovation-based strategies, R&D investments in imperfectly competitive markets and the role of vertical coordination. To address the topics, a brief description of the industry, a game-theory conceptual framework and a strategic analysis of the marketing channels are proposed. The major conclusions can be summarized as follows: (i) product-innovation strategies are the result of an evaluation of the option value of the R&D investments, the risk of failure and competitors' strategies (ii) demand pull only may be insufficient to trigger innovation: an efficient retailing system, costs of failure and production efficiency may influence the firm's strategic approach to innovation.

Suggested Citation

  • Russo, Carlo & Cardillo, Concetta & Perito, Maria Angela, 2003. "Product Innovation And Imperfect Competition In The Italian Fruit-Drink Industry," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 6(1), pages 1-14.
    • Handle: RePEc:ags:ifaamr:34298
    DOI: 10.22004/ag.econ.34298
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    References listed on IDEAS

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    1. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
    2. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    3. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329.
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    Cited by:

    1. Simeone, Mariarosaria & Marotta, Giuseppe & Rotondo, Giacomo, 2015. "Competitive strategies in the Italian pasta industry," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 16(1), pages 1-15.

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