Dynamic Investment Strategies and Leadership in Product Innovation

Dawid H, Keoula M, Kopel M, Kort PM (2017) Working Papers in Economics and Management; 03-2017.
Bielefeld: Bielefeld University, Department of Business Administration and Economics.

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Abstract
We employ a dynamic market model with endogenous creation of submarkets to study the optimal product innovation strategies of incumbent firms. Firms invest in production capacity and R&D knowledge stock, where the latter determines the hazard rate of innovation. We find that under Markov Perfect Equilibrium behavior the firm with a larger market share on the established market is less likely to be the first innovator. Investment in R&D knowledge is negatively affected by the opponent's production capacity on the established market if the opponent has not innovated yet. However, this effect is reversed after the opponent has successfully introduced the new product. The firm with higher costs of adjusting capacity for the established product has a larger incentive to engage in product innovation and might even achieve higher long run profit than its more efficient competitor.
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Dawid H, Keoula M, Kopel M, Kort PM. Dynamic Investment Strategies and Leadership in Product Innovation. Working Papers in Economics and Management. Vol 03-2017. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2017.
Dawid, H., Keoula, M., Kopel, M., & Kort, P. M. (2017). Dynamic Investment Strategies and Leadership in Product Innovation (Working Papers in Economics and Management, 03-2017). Bielefeld: Bielefeld University, Department of Business Administration and Economics. doi:10.4119/unibi/2909058
Dawid, H., Keoula, M., Kopel, M., and Kort, P. M. (2017). Dynamic Investment Strategies and Leadership in Product Innovation. Working Papers in Economics and Management, 03-2017, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
Dawid, H., et al., 2017. Dynamic Investment Strategies and Leadership in Product Innovation, Working Papers in Economics and Management, no.03-2017, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
H. Dawid, et al., Dynamic Investment Strategies and Leadership in Product Innovation, Working Papers in Economics and Management, vol. 03-2017, Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2017.
Dawid, H., Keoula, M., Kopel, M., Kort, P.M.: Dynamic Investment Strategies and Leadership in Product Innovation. Working Papers in Economics and Management, 03-2017. Bielefeld University, Department of Business Administration and Economics, Bielefeld (2017).
Dawid, Herbert, Keoula, Michel, Kopel, Michael, and Kort, Peter M. Dynamic Investment Strategies and Leadership in Product Innovation. Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2017. Working Papers in Economics and Management. 03-2017.
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