IDEAS home Printed from https://ideas.repec.org/a/eee/dyncon/v35y2011i4p462-478.html
   My bibliography  Save this article

Two state capital accumulation with heterogenous products: Disruptive vs. non-disruptive goods

Author

Listed:
  • Caulkins, Jonathan P.
  • Feichtinger, Gustav
  • Grass, Dieter
  • Hartl, Richard F.
  • Kort, Peter M.

Abstract

The paper considers the problem of a firm that, while producing a standard product, has the option to introduce an innovative product. The innovative product competes with the standard product and will therefore reduce revenues of the standard product. A distinction is made between innovative products that do or do not become even more relatively appealing as their market share grows (e.g., because of network externalities). It is shown that in the former case, which we call a "disruptive" good, history dependent long run equilibria can occur, which are in line with recent real life economic examples.

Suggested Citation

  • Caulkins, Jonathan P. & Feichtinger, Gustav & Grass, Dieter & Hartl, Richard F. & Kort, Peter M., 2011. "Two state capital accumulation with heterogenous products: Disruptive vs. non-disruptive goods," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 462-478, April.
  • Handle: RePEc:eee:dyncon:v:35:y:2011:i:4:p:462-478
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165-1889(10)00212-5
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Barucci, Emilio, 1998. "Optimal Investments with Increasing Returns to Scale," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 789-808, August.
    2. Engelbert Dockner & Gustav Feichtinger, 1991. "On the optimality of limit cycles in dynamic economic systems," Journal of Economics, Springer, vol. 53(1), pages 31-50, February.
    3. W.-J. Beyn, T. Pampel, W.Semmler, 2001. "Dynamic optimization and Skiba sets in economic examples," Computing in Economics and Finance 2001 29, Society for Computational Economics.
    4. Skiba, A K, 1978. "Optimal Growth with a Convex-Concave Production Function," Econometrica, Econometric Society, vol. 46(3), pages 527-539, May.
    5. Kiseleva, Tatiana & Wagener, F.O.O., 2010. "Bifurcations of optimal vector fields in the shallow lake model," Journal of Economic Dynamics and Control, Elsevier, vol. 34(5), pages 825-843, May.
    6. Russell Davidson & Richard Harris, 1981. "Non-Convexities in Continuous Time Investment Theory," Review of Economic Studies, Oxford University Press, vol. 48(2), pages 235-253.
    7. Wagener, F. O. O., 2003. "Skiba points and heteroclinic bifurcations, with applications to the shallow lake system," Journal of Economic Dynamics and Control, Elsevier, vol. 27(9), pages 1533-1561, July.
    8. Haunschmied, Josef L. & Kort, Peter M. & Hartl, Richard F. & Feichtinger, Gustav, 2003. "A DNS-curve in a two-state capital accumulation model: a numerical analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 27(4), pages 701-716, February.
    9. Dechert, W. Davis, 1983. "Increasing returns to scale and the reverse flexible accelerator," Economics Letters, Elsevier, vol. 13(1), pages 69-75.
    10. Qiu, Larry D., 1997. "On the Dynamic Efficiency of Bertrand and Cournot Equilibria," Journal of Economic Theory, Elsevier, vol. 75(1), pages 213-229, July.
    11. Robert E. Lucas & Jr., 1967. "Adjustment Costs and the Theory of Supply," Journal of Political Economy, University of Chicago Press, vol. 75, pages 321-321.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:uto:dipeco:201338 is not listed on IDEAS
    2. Grass, D., 2012. "Numerical computation of the optimal vector field: Exemplified by a fishery model," Journal of Economic Dynamics and Control, Elsevier, vol. 36(10), pages 1626-1658.
    3. Dawid, Herbert & Kopel, Michael & Kort, Peter M., 2013. "New product introduction and capacity investment by incumbents: Effects of size on strategy," European Journal of Operational Research, Elsevier, vol. 230(1), pages 133-142.
    4. Privileggi, Fabio, 2015. "Takeoff vs. stagnation in endogenous recombinant growth models," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 108(C), pages 184-214.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:dyncon:v:35:y:2011:i:4:p:462-478. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/jedc .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.