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Product life cycles, product innovation and firm growth

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  • Hiroki Murakami

    (Chuo University)

Abstract

This paper studies research and development (R &D) for product innovation of firms faced with “product life cycles.” We represent the concept of product life cycles with bounded revenue and profit functions and describe R &D for product innovation as an activity to control the “birth rate of a new product” (i.e., the probability of product innovation). We then derive the optimal level of R &D, corresponding to the optimal birth rate of a new product, and show that the growth rate of the firm’s expected total revenue converges to the optimal birth rate of a new product in the long run.

Suggested Citation

  • Hiroki Murakami, 2024. "Product life cycles, product innovation and firm growth," Annals of Operations Research, Springer, vol. 337(3), pages 873-890, June.
    • Handle: RePEc:spr:annopr:v:337:y:2024:i:3:d:10.1007_s10479-023-05605-x
    DOI: 10.1007/s10479-023-05605-x
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