Title
Two state capital accumulation with heterogenous products : disruptive vs. non-disruptive goods Two state capital accumulation with heterogenous products : disruptive vs. non-disruptive goods
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Amsterdam ,
Subject
Economics
Source (journal)
Journal of economic dynamics and control. - Amsterdam
Volume/pages
35(2011) :4 , p. 462-478
ISSN
0165-1889
ISI
000287566400004
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
The paper considers the problem of a firm that, while producing a standard product, has the option to introduce an innovative product. The innovative product competes with the standard product and will therefore reduce revenues of the standard product. A distinction is made between innovative products that do or do not become even more relatively appealing as their market share grows (e.g., because of network externalities). It is shown that in the former case, which we call a disruptive good, history dependent long run equilibria can occur, which are in line with recent real life economic examples.
E-info
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Handle