Trade-In Programs in the Context of Technological Innovation with Herding

15 Pages Posted: 6 Apr 2014

See all articles by Paolo Pellizzari

Paolo Pellizzari

Ca Foscari University of Venice - Dipartimento di Economia

Elena Sartori

Ca Foscari University of Venice - Department of Management

Marco Tolotti

Ca Foscari University of Venice - Department of Management

Date Written: April 1, 2014

Abstract

We study optimal pricing strategies and consequent market shares’ dynamics in a transition from an old and established technology to a new one. We simulate an agent based model, in which a large population of possible buyers decide whether to adopt or not depending on prices, private signals and herding behavior. The firm, on its part, sets prices to maximize revenues. We show that trade-in programs, in practice comparable to very aggressive discounts, are supported by a rational attitude.

Keywords: agent-based models, mobile phone market, random utilities, technology competition, threshold models

JEL Classification: C63, C73, 033

Suggested Citation

Pellizzari, Paolo and Sartori, Elena and Tolotti, Marco, Trade-In Programs in the Context of Technological Innovation with Herding (April 1, 2014). Department of Management, Università Ca' Foscari Venezia Working Paper No. 2014/4, Available at SSRN: https://ssrn.com/abstract=2420750

Paolo Pellizzari

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy

Elena Sartori

Ca Foscari University of Venice - Department of Management ( email )

San Giobbe, Cannaregio 873
Venice, 30121
Italy

Marco Tolotti (Contact Author)

Ca Foscari University of Venice - Department of Management ( email )

San Giobbe, Cannaregio 873
Venice, 30121
Italy

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