The Role of an Imitating Firm in a Dynamic Context

We analyze the effects of an imitating firm on the behavior of the innovatingfirm. The framework of analysis used is a dynamic duopoly model of vertical productdifferentiation, where both the innovator and the imitator compete simultaneously inprice and quality. We obtain that when the market is sma...

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Main Author: Francisco Martínez –Sánchez
Format: Article
Language:English
Published: Universidad de Antioquia 2007-12-01
Series:Lecturas de Economía
Subjects:
Online Access:http://www.scielo.org.co/scielo.php?script=sci_pdf&pid=S0120-25962007000200009&lng=en&nrm=iso&tlng=en
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spelling doaj-f31c19c784f54295993c10409ee0564e2020-11-25T03:43:56ZengUniversidad de AntioquiaLecturas de Economía0120-25962007-12-016767225240The Role of an Imitating Firm in a Dynamic ContextFrancisco Martínez –SánchezWe analyze the effects of an imitating firm on the behavior of the innovatingfirm. The framework of analysis used is a dynamic duopoly model of vertical productdifferentiation, where both the innovator and the imitator compete simultaneously inprice and quality. We obtain that when the market is small, the presence of an imitatorencourages the innovator to increase its innovating process, so the entry of the imitatorshould not be obstructed; and, when the market is large, the imitator reduces the innovator’sincentives to invest its economic resources in R&D and to provide a higher quality, so theentry of the imitator should not be encouraged.http://www.scielo.org.co/scielo.php?script=sci_pdf&pid=S0120-25962007000200009&lng=en&nrm=iso&tlng=enLeaderImitatorQualityDifferentiation of ProductConsumer.
collection DOAJ
language English
format Article
sources DOAJ
author Francisco Martínez –Sánchez
spellingShingle Francisco Martínez –Sánchez
The Role of an Imitating Firm in a Dynamic Context
Lecturas de Economía
Leader
Imitator
Quality
Differentiation of Product
Consumer.
author_facet Francisco Martínez –Sánchez
author_sort Francisco Martínez –Sánchez
title The Role of an Imitating Firm in a Dynamic Context
title_short The Role of an Imitating Firm in a Dynamic Context
title_full The Role of an Imitating Firm in a Dynamic Context
title_fullStr The Role of an Imitating Firm in a Dynamic Context
title_full_unstemmed The Role of an Imitating Firm in a Dynamic Context
title_sort role of an imitating firm in a dynamic context
publisher Universidad de Antioquia
series Lecturas de Economía
issn 0120-2596
publishDate 2007-12-01
description We analyze the effects of an imitating firm on the behavior of the innovatingfirm. The framework of analysis used is a dynamic duopoly model of vertical productdifferentiation, where both the innovator and the imitator compete simultaneously inprice and quality. We obtain that when the market is small, the presence of an imitatorencourages the innovator to increase its innovating process, so the entry of the imitatorshould not be obstructed; and, when the market is large, the imitator reduces the innovator’sincentives to invest its economic resources in R&D and to provide a higher quality, so theentry of the imitator should not be encouraged.
topic Leader
Imitator
Quality
Differentiation of Product
Consumer.
url http://www.scielo.org.co/scielo.php?script=sci_pdf&pid=S0120-25962007000200009&lng=en&nrm=iso&tlng=en
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