Document Type
Article
Publication Date
12-9-2013
Abstract
I develop a dynamic investment game with a “memoryless” research and development process in which an incumbent and an entrant can invest in a new technology, and the entrant can also invest in the old technology. I show that an increase in the probability of successfully implementing a technology can cause the incumbent to reduce its investment. Under certain conditions, if the success probability is high, the incumbent allows the entrant to win the new technology so that firms reach an equilibrium in which they use different technologies, and threats of retaliation prevent attacks; but if the success probability is low, such an equilibrium cannot be sustained, and both firms eventually implement both technologies.
Recommended Citation
Selove. M. (2014). “A Dynamic Model of Competitive Entry Response,” Marketing Science, 33, 3, p. 353-363. doi: 10.1287/mksc.2013.0827
Peer Reviewed
1
Copyright
INFORMS
Included in
Business Administration, Management, and Operations Commons, Economic Theory Commons, Organizational Behavior and Theory Commons, Other Business Commons
Comments
This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Marketing Science, volume 33, issue 3, in 2014 following peer review. The definitive publisher-authenticated version is available online at DOI:10.1287/mksc.2013.0827.