IDEAS home Printed from https://ideas.repec.org/p/eyd/cp2015/304.html
   My bibliography  Save this paper

The Impact of Innovative New Economy Products on Market Competition: Competition Might Decrease

Author

Listed:
  • Arzdar Kiracı

    (Siirt University, Department of Economics)

Abstract

This paper presents a parametric Cournot type of game theoretic model that uses Rogers’ Diffusion of Innovations Theory to construct a model that simulates the strategic interaction between firms. The constructed model simulates the strategic interaction of old economy firms that compete with the adoption of an innovative information and communication technologies based product, which is produced by a monopolistic New Economy firm. The model incorporates the accelerated product innovation process, globalization and interaction of firms in competitive environment. This paper confirms the expected result that innovator firms gain by adopting profitable New Economy products; however, surprisingly, under some circumstances market competition might decrease even when there is globalization. It is proven that this result is valid for markets with large (customer) demands when firms of the New Economy that produce innovative products charge high prices for their products. Firms of the New Economy that produce innovative products are given the privilege to be monopolists for the duration of their patent, but according to the findings of this paper they need to be regulated by competition authorities.

Suggested Citation

  • Arzdar Kiracı, 2015. "The Impact of Innovative New Economy Products on Market Competition: Competition Might Decrease," EY International Congress on Economics II (EYC2015), November 5-6, 2015, Ankara, Turkey 304, Ekonomik Yaklasim Association.
    • Handle: RePEc:eyd:cp2015:304
    as

    Download full text from publisher

    File URL: http://www.ekonomikyaklasim.org/eyc2015/userfiles/downloads/_Paper%20304.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Salvatore, Dominick, 2003. "The new economy and growth: editor's introduction," Journal of Policy Modeling, Elsevier, vol. 25(5), pages 431-434, July.
    2. Koski, H. & Rouvinen, P. & Yla-Anttila, P., 2002. "ICT clusters in Europe The great central banana and the small Nordic potato," Information Economics and Policy, Elsevier, vol. 14(2), pages 145-165, June.
    3. Pohjola, Matti, 2002. "The New Economy: facts, impacts and policies," Information Economics and Policy, Elsevier, vol. 14(2), pages 133-144, June.
    4. B B M Shao & W S Shu, 2004. "Productivity breakdown of the information and computing technology industries across countries," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(1), pages 23-33, January.
    5. Dickerson, Mary Dee & Gentry, James W, 1983. "Characteristics of Adopters and Non-Adopters of Home Computers," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 10(2), pages 225-235, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jalava, Jukka, 2002. "The Production and Use of ICT in Finland," Discussion Papers 827, The Research Institute of the Finnish Economy.
    2. Pepermans, Roland & Verleye, Gino & Van Cappellen, Sarah, 1996. "'Wallbanking', innovativeness and computer attitudes: 25-40-year-old ATM-users on the spot," Journal of Economic Psychology, Elsevier, vol. 17(6), pages 731-748, December.
    3. D K Despotis, 2005. "A reassessment of the human development index via data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(8), pages 969-980, August.
    4. Lokesh Jasrai, 2014. "Measuring Mobile Telecom Service Innovativeness Among Youth," Paradigm, , vol. 18(1), pages 103-116, June.
    5. Matti Pohjola, 2002. "The New Economy in Growth and Development," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(3), pages 380-396.
    6. Kupeli, Birgul & Salman, Gulberk Gultekin & Karaosmanoglu, Elif & Daim, Tugrul, 2024. "Exploring self-service technology adoption: Case of airline check in," Technology in Society, Elsevier, vol. 77(C).
    7. R Ramanathan, 2005. "Estimating energy consumption of transport modes in India using DEA and application to energy and environmental policy," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(6), pages 732-737, June.
    8. Grigori Feiguine & Julia Solovjova, 2013. "ICT Investment and Internationalization of the Russian Economy," EIIW Discussion paper disbei196, Universitätsbibliothek Wuppertal, University Library.
    9. Huh, Young Eun & Kim, Sang-Hoon, 2008. "Do early adopters upgrade early? Role of post-adoption behavior in the purchase of next-generation products," Journal of Business Research, Elsevier, vol. 61(1), pages 40-46, January.
    10. A. Rainer & R. Strohmaier, 2014. "Modeling the diffusion of general purpose technologies in an evolutionary multi-sector framework," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(3), pages 425-444, August.
    11. Müller-Seitz, Gordon & Dautzenberg, Kirsti & Creusen, Utho & Stromereder, Christine, 2009. "Customer acceptance of RFID technology: Evidence from the German electronic retail sector," Journal of Retailing and Consumer Services, Elsevier, vol. 16(1), pages 31-39.
    12. Demoussis, Michael & Giannakopoulos, Nicholas, 2006. "The dynamics of home computer ownership in Greece," Information Economics and Policy, Elsevier, vol. 18(1), pages 73-86, March.
    13. K. Sudhir & Ishani Tewari, 2015. "Long Term Effects of "Prosperity in Youth" on Consumption: Evidence from China," Cowles Foundation Discussion Papers 2025, Cowles Foundation for Research in Economics, Yale University.
    14. Igbaria, M. & Iivari, J., 1995. "The effects of self-efficacy on computer usage," Omega, Elsevier, vol. 23(6), pages 587-605, December.
    15. S J Ho & S K Mallick, 2010. "The impact of information technology on the banking industry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(2), pages 211-221, February.
    16. Kolko, Jed, 2002. "Silicon mountains, silicon molehills: geographic concentration and convergence of internet industries in the US," Information Economics and Policy, Elsevier, vol. 14(2), pages 211-232, June.
    17. Steve Onyeiwu, 2002. "Inter-Country Variations in Digital Technology in Africa: Evidence, Determinants, and Policy Applications," WIDER Working Paper Series DP2002-72, World Institute for Development Economic Research (UNU-WIDER).
    18. Li, Ho-Shui & Houston, Jack E., 2001. "Factors Affecting Consumer Preferences For Major Food Markets In Taiwan," Journal of Food Distribution Research, Food Distribution Research Society, vol. 32(01), pages 1-13, March.
    19. Cassimon, Danny & Engelen, Peter-Jan, 2005. "Impact of the legal and institutional framework on the financial architecture of new economy firms in developing countries," Information Economics and Policy, Elsevier, vol. 17(2), pages 247-269, March.
    20. Maliranta, Mika & Rouvinen, Petri, 2003. "Productivity Effects of ICT in Finnish Business," Discussion Papers 852, The Research Institute of the Finnish Economy.

    More about this item

    Keywords

    Game Theory; Cost structure; New Economy; Globalization; Competition; Innovative Product;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:eyd:cp2015:304. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ozan Eruygur (email available below). General contact details of provider: http://www.ekonomikyaklasim.org .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.