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Innovation in a generalized timing game

  • Smirnov, Vladimir
  • Wait, Andrew

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.

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Paper provided by University of Sydney, School of Economics in its series Working Papers with number 2013-16.

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Date of creation: Aug 2013
Date of revision: Mar 2015
Handle: RePEc:syd:wpaper:2123/9340
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  3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  4. Andreas Park & Lones Smith, 2008. "Caller Number Five and Related Timing Games," Working Papers tecipa-317, University of Toronto, Department of Economics.
  5. Bobtcheff, Catherine & Mariotti, Thomas, 2010. "Potential Competition in Preemption Games," IDEI Working Papers 594, Institut d'Économie Industrielle (IDEI), Toulouse.
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  12. Hoppe, Heidrun C. & Lehmann-Grube, Ulrich, 2005. "Innovation timing games: a general framework with applications," Journal of Economic Theory, Elsevier, vol. 121(1), pages 30-50, March.
  13. Van Long Ngo, 2010. "A Survey Of Dynamic Games In Economics:," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., volume 1, number 7577, May.
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  17. Hugo A. Hopenhayn & Francesco Squintani, 2011. "Preemption Games with Private Information," Review of Economic Studies, Oxford University Press, vol. 78(2), pages 667-692.
  18. Hendricks, Kenneth, 1992. "Reputations in the adoption of a new technology," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 663-677, December.
  19. Drew Fudenberg & Jean Tirole, 1985. "Preemption and Rent Equalization in the Adoption of New Technology," Review of Economic Studies, Oxford University Press, vol. 52(3), pages 383-401.
  20. Heidrun C. Hoppe & Ulrich Lehmann-Grube, 2001. "Second-Mover Advantages in Dynamic Quality Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(3), pages 419-433, 09.
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