Time-to-Market in Vertically Differentiated Industries
CORE Discussion Paper No. 2004/77
28 Pages Posted: 24 Jun 2005
Date Written: November 2004
We study the introduction of new products in a vertically differentiated industry. Innovative firms have to engage into reducing time-to-market investments in order to shorten the time interval between innovation and sales. Still, these investments generate irreversible costs which have to be put in balance with profits accruing to the firm when starting its sales earlier than otherwise. We characterize the optimal investment policies under various assumptions concerning the market structure.
Keywords: time-to-market, market structure, vertical product differentiation
JEL Classification: L11, L13, O31
Suggested Citation: Suggested Citation