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- Title
ENTRY PATTERNS OVER THE PRODUCT LIFE CYCLE.
- Authors
GUTIÉRREZ, ÓSCAR; RUIZ-ALISEDA, FRANCISCO
- Abstract
We study a game-theoretic real options model of new market entry based on empirical evidence of demand for a new product growing over time and eventually falling. Yet, firms do not know ex ante when this will occur, which creates incentives to update information by delaying irreversible entry. By assuming that the construction of a new productive plant takes some time and is unobservable in the meantime, while operation in the market is not, we show that entry rates increase or decrease under certain conditions related to the rate at which flow profits decrease as more firms enter the industry.
- Subjects
PRODUCT life cycle; MARKET entry; MARKETING strategy; MARKET share; PROFIT
- Publication
Manchester School (1463-6786), 2009, Vol 77, Issue 5, p594
- ISSN
1463-6786
- Publication type
Article
- DOI
10.1111/j.1467-9957.2009.02113.x