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Price competition in the presence of rapid innovation and imitation: the case of digital cameras

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  • S. Thompson

Abstract

High-tech rivalry typically involves sellers introducing a sequence of models each offering greater capacity/functionality. Given heterogeneous consumers this both creates and erodes any quality/novelty premium as innovation segments the market and imitation then populates the segments so created. We present a hedonic price analysis using a unique US digital camera database. This confirms the intensity of the quality-adjusted price fall and the dominance of vertical differentiation and identifies a premium for frontier models.

Suggested Citation

  • S. Thompson, 2009. "Price competition in the presence of rapid innovation and imitation: the case of digital cameras," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(1), pages 93-106.
  • Handle: RePEc:taf:ecinnt:v:18:y:2009:i:1:p:93-106
    DOI: 10.1080/10438590701672165
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    References listed on IDEAS

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    1. David S. Evans & Andrei Hagiu & Richard Schmalensee, 2008. "Invisible Engines: How Software Platforms Drive Innovation and Transform Industries," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550687, March.
    2. Geroski, Paul, 2003. "The Evolution of New Markets," OUP Catalogue, Oxford University Press, number 9780199248896.
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