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Time-to-market in vertically differentiated industries

  • Emanuele Bacchiega
  • Jean J. Gabszewicz
  • Ornella Tarola

We study the introduction of new products in a vertically differentiated industry. Innovative firms have to engage into reducing time-to-market investments in order to shorten the time interval between innovation and sales. Still, these investments generate irreversible costs which have to be put in balance with profits accruing to the firm when starting its sales earlier than otherwise. We characterize the optimal investment policies under various assumptions concerning the market structure.

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Article provided by The International Society for Economic Theory in its journal International Journal of Economic Theory.

Volume (Year): 3 (2007)
Issue (Month): 4 ()
Pages: 279-295

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Handle: RePEc:bla:ijethy:v:3:y:2007:i:4:p:279-295
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  1. Chari, V V & Hopenhayn, Hugo, 1991. "Vintage Human Capital, Growth, and the Diffusion of New Technology," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1142-65, December.
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  9. Elhanan Helpman & Manuel Trajtenberg, 1994. "A Time to Sow and a Time to Reap: Growth Based on General Purpose Technologies," NBER Working Papers 4854, National Bureau of Economic Research, Inc.
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