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Innovation in a generalized timing game

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  • Smirnov, Vladimir
  • Wait, Andrew

Abstract

We examine innovation as a market-entry timing game with complete information and observable actions. We characterize all pure-strategy subgame perfect equilibria for the two-player symmetric model allowing both the leader's and the followers' payoff functions to be multi-peaked, non-monotonic and discontinuous. We provide sufficient conditions for when the equilibria can be Pareto ranked and when the equilibrium is unique. Economic applications discussed include process and product innovation and the timing of the sale of an asset.

Suggested Citation

  • Smirnov, Vladimir & Wait, Andrew, 2013. "Innovation in a generalized timing game," Working Papers 2013-16, University of Sydney, School of Economics, revised Mar 2015.
  • Handle: RePEc:syd:wpaper:2123/9340
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    References listed on IDEAS

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    More about this item

    Keywords

    product innovation; process innovation; follower; leader; entry; timing games;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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