modeling global spillover of new product takeoff abstract this article examines the global spillover of foreign product introductions and takeoffs on a focal country s time to takeoff using a novel data set of penetration data for eight high tech products across 55 countries it shows how foreign clout the susceptibility to foreign influences and intercountry distances affect global spillover patterns the authors find that foreign takeoffs but not foreign introductions accelerate a focal country s time to takeoff the larger the country the higher its economic wealth and the more it exports the more clout it has in the global spillover process in contrast the poorer the country the more tourists it receives and the higher its population density the more susceptible it is to global spillover effects cross country spillover effects are stronger the closer the countries are to one another both geographically and economically but not necessarily in terms of culture the model the authors develop also quantifies the spillover between each co

the market evolution and sales takeoff of product innovations in contrast to the prevailing supply side explanation that price decreases are the key driver of a sales takeoff we argue that outward shifting supplyand demand curves lead to market takeoff our fundamental idea is that sales in new markets are initially low because the first commercialized forms of new innovations are primitive then as new firms enter actual and perceived product quality improves and prices possibly drop which leads to a takeoff in sales to provide empirical evidence for this explanation we explore the relationship between takeoff times price decreases and firm entry for a sample of consumer and industrial product innovations commercialized in the united states over the past 150 years based on a proportional hazards analysis of takeoff times we find that new firm entry dominates other factors in explaining observed sales takeoff times we interpret these results as supporting the idea that demand shifts during the early evolution of a new market due to nonprice factors is the key driver of a sales takeoff

a percolation based model explaining delayed takeoff in new product diffusion a model of new product diffusion is proposed in which a site percolation dynamics represents socially driven diffusion of knowledge about the product s characteristics in a population of consumers a consumer buys the new product if her valuation of it formed after her witnessing the product in use among her friends or neighbors is not below the price of the product announced in a given period our model attributes the empirical finding of a delayed takeoff of a new product to a drift of the percolation dynamics from a nonpercolating regime to a percolating regime this drift is caused by learning effects lowering the price of the product or by network effects increasing its individual valuations by consumers both with an increasing number of buyers

technology shocks technological collaboration and innovation outcomes in the early to mid 1990s technology alliances suddenly surged to unprecedented levels roughly 300 growth per year from 1990 to 1995 and then declined just as precipitously this massive increase in alliance activity caused the crystallization of a giant component in the global technology network that connected a large portion of the world s firms government labs universities and other organizations however when alliance activity declined the component disintegrated what caused this spike in alliance activity and did this large but transient change in collaboration activity leave any enduring effect the data here suggest that a major technology shock may have provoked this alliance surge a technology shock may simultaneously unleash significant innovation opportunities while creating great uncertainty in the economic environment though it is well known that firms often use alliances both to respond to uncertainty and facilitate innovation little is known about how technology shocks affect the collaboration behavior of firms and how these two factors separately influence innovation outcomes i integrate an inductive study of collaboration activity and a technology shock with existing research on economics alliances and networks to build a set of arguments about how technology shocks will influence alliance behavior how changes in alliance behavior will influence the global technology collaboration network and about how each of these changes is likely to influence the innovative outcomes of firms i then explore the separate and joint effects of the technology shock and collaboration activity on innovation using a large sample panel study of patenting by north american firms

credible threats in a wage bargaining model with on the job search abstract this note shows that in standard equilibrium search models with strategic wage bargaining and on the job search renegotiation does not require mutual consent if the worker needs a credible threat to trigger renegotiation wages are renegotiated less frequently than in the original model

a new product growth for model consumer durables this article originally appeared in management science january 1969 volume 15 number 5 pp 215 227 published by the institute of management sciences a growth model for the timing of initial purchase of new products is developed and tested empirically against data for eleven consumer durables the basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of previous buyers a behavioral rationale for the model is offered in terms of innovative and imitative behavior the model yields good predictions of the sales peak and the timing of the peak when applied to historical data a long range forecast is developed for the sales of color television sets

worker mobility in a search model with adverse selection we analyze the effects of adverse selection on worker turnover and wage dynamics in a frictional labor market we consider a model of on the job search where firms offer promotion wage contracts to workers of different abilities which is unknown to firms at the hiring stage with sufficiently strong information frictions low wage firms offer separating contracts and hire all types of workers in equilibrium whereas high wage firms offer pooling contracts promoting high ability workers only low ability workers have higher turnover rates and are more often employed in low wage firms the model replicates the negative relationship between job to job transitions and wages observed in the u s labor market

mcdonald s and kfc in china competitors or companions in this paper we study the entry and expansion decisions of mcdonald s and kfc in china using an originally assembled data set on the two chains expansion in the china market from their initial entry up to year 2007 we analyze how the presence of a rival affects each firm s strategies the results indicate that a rival s presence has a net positive effect on a chain s expansion decision we focus on testing two possible explanations for a positive rival impact market learning and demand expansion first we derive a set of theoretical predictions on how a chain s optimal expansion decision would react to its rival s expansion patterns when market learning versus demand expansion is the driving force of the rival s positive influence the empirical analysis based on these predictions consistently suggests that market learning is more likely to explain the positive effect of kfc on mcdonald s and that demand expansion is more plausible with mcdonald s positive spillover on kfc in other words the results are consistent with the presence of kfc signaling market demand potential and growth to mcdonald s and the presence of mcdonald s helping to cultivate consumer taste and generate demand for western fast food which benefits kfc

assortative matching with explicit search costs in this paper i analyze a decentralized search and matching economy with transferable utility composed of heterogeneous agents i explore whether becker s assortative matching result generalizes to an economy where agents engage in costly search in an economy with explicit additive search costs complementarities in joint production supermodularity of the joint production function lead to assortative matching this is in contrast to previous literature which had shown that in a search economy with discounting assortative matching may fail even when the joint production function is supermodular

on the job search and the wage distribution the article structually estimates an on the job search model of job separations given each employer pays observably equivalent workers the same but wages are dispersed across employers an employer s separation flow is the sum of an exogenous outflow unrelated to the wage and a job to job flow that decreases with the employer s wage using data from the danish integrated database for labour market research the empirical results imply as predicted by theory that search effort declines with the wage furthermore the estimates explain the employment effect defined as the horizontal difference between the distribution of wages earned and the wage offer distribution

demand heterogeneity and technology evolution implications for product and process innovation the evolution of technology has been a central issue in the strategy and organizations literature however the focus of much of this work has been on what is essentially the supply side of technical change the evolution of firm capabilities we present a demand based view of technology evolution that is focused on the interaction between technology development and the demand environment in which the technology is ultimately evaluated we develop a formal computer simulation model that explicitly considers the influence of heterogeneity in market demand the presence of consumers with different needs and requirements on firms innovation choices the model is used to examine the dynamics of product and process innovation utterback and abernathy 1975 the analysis reveals that demand heterogeneity offers an alternative to supply side explanations of the technology life cycle further by considering the implications of decreasing marginal utility from performance improvements the model highlights the role of technologically satisfied consumers in shaping innovation incentives and suggests a rationale for a new stage in the technology life cycle characterized by increasing performance at a stable price the stage has not yet been treated formally in the literature but is widely observed most prominently in digital and information based technologies

sorting and decentralized price competition we investigate the role of search frictions in markets with price competition and how it leads to sorting of heterogeneous agents there are two aspects of value creation the match value when two agents actually trade and the probability of trading governed by the search technology we show that positive assortative matching obtains when complementarities in the former outweigh complementarities in the latter this happens if and only if the match value function is root supermodular that is its nth root is supermodular where n reflects the elasticity of substitution of the search technology this condition is weaker than the condition required for positive assortative matching in markets with random search

technological extinctions of industrial firms an inquiry into their nature and causes after a buildup in the number of firms new industries commonly experience a shakeout in which the number of firms declines sharply three theoretical perspectives on how technological change contributes to industry shakeouts are analyzed the theories are used to synthesize predictions concerning technological change and industry evolution the predictions inform an analysis of four us industries that experienced sharp shakeouts automobiles tires televisions and penicillin using data on firm participation and innovation from the commercial inception of the four products through their formative eras we uncover regularities in how the products evolved the regularities suggest that shakeouts are not triggered by particular technological innovations nor by dominant designs but by an evolutionary process in which technological innovation contributes to a mounting dominance by some early entering firms copyright 1997 by oxford university press

will it ever fly modeling the takeoff of really new consumer durables a consistent pattern observed for really new household consumer durables is a takeoff or dramatic increase in sales early in their history the takeoff tends to appear as an elbow shaped discontinuity in the sales curve showing an average sales increase of over 400 in contrast most marketing textbooks as well as diffusion models generally depict the growth of new consumer durables as a smooth sales curve our discussions with managers indicate that they have little idea about the takeoff and its associated characteristics many managers did not even know that most successful new consumer durables had a distinct takeoff their sales forecasts tend to show linear growth yet knowledge about the takeoff is crucial for managers to decide whether to maintain increase or withdraw support of new products it is equally important for industry analysts who advise investors and manufacturers of complementary and substitute products although previous studies have urged researchers to examine the takeoff no research has addressed this critical event while diffusion models are commonly used to study new product sales growth they do not explicitly consider a new product s takeoff in sales indeed diffusion researchers frequently use data only from the point of takeoff therefore nothing is known about the takeoff or models appropriate for this event our study provides the first analysis of the takeoff in particular we address three key questions i how much time does a newly introduced product need to takeoff ii does the takeoff have any systematic patterns iii can we predict the takeoff we begin our study by developing an operational measure to determine when the takeoff occurs we found that when the base level of sales is small a relatively large percentage increase could occur without signaling the takeoff conversely when the base level of sales is large the takeoff sometimes occurs with a relatively small percentage increase in sales therefore we developed a threshold for takeoff this is a plot of percentage sales growth relative to a base level of sales common across all categories we define the takeoff as the first year in which an individual category s growth rate relative to base sales crosses this threshold the threshold measure correctly identifies the takeoff in over 90 of our categories we model the takeoff with a hazard model because of its advantages for analyzing time based events we consider three primary independent variables price year of introduction and market penetration as well as several control variables the hazard model fits the pattern of takeoffs very well with price and market penetration being strong correlates of takeoff our results provide potential generalizations about the time to takeoff and the price reduction nominal price and penetration at takeoff in particular we found that on average for 16 post world war ii categories the price at takeoff is 63 of the introductory price the time to takeoff from introduction is six years the penetration at takeoff is 1 7 the time to takeoff is decreasing for more recent categories for example the time to takeoff is 18 years for categories introduced before world war ii but only six years for those introduced after world war ii many of the products in our sample had a takeoff near three specific price points in nominal dollars 1000 500 and 100 in addition we show how the hazard model can be used to predict the takeoff the model predicts takeoff one year ahead with an expected average error of 1 2 years it predicts takeoff at a product s introduction with an expected average error of 1 9 years even against the simple mean time to takeoff of six years for recent categories the model s performance represents a tremendous improvement in prediction it represents an immeasurable improvement in prediction for managers who currently have no idea about how long it takes for a new product to takeoff the threshold rule for determining takeoff can be used to distinguish between a large increase in sales and a real takeoff some limitations of this study could provide fruitful areas for future research our independent variables suffer from endogeneity bias so alternative variables or methods could address this limitation also the takeoff may be related to additional variables such as relative advantage over substitutes and the presence of complementary products finally examination of sales from takeoff to their leveling off could be done with an integrated model of takeoff and sales growth or with the hazard model we propose generalizations about this period of sales growth could also be of tremendous importance to managers of new products

the impact of foreign direct investment on new firm survival in the uk evidence for static versus dynamic industries the paper examines the impact of foreign direct investment fdi on the survival of business start ups fdi has potential for both negative displacement competition effects as well as positive knowledge spillover and linkage effects on new ventures we find a net positive effect for the whole dataset however a major contribution of the paper is to outline and test an argument that this effect is likely to be comprised of a net negative effect in dynamic industries high churn firm entry plus exit relative to the stock of firms alongside a net positive effect in static low churn industries we find evidence to support this view the results identify new effects of globalisation on enterprise development with associated challenges for industrial policy

pricing weather derivatives this article presents a general method for pricing weather derivatives specification tests find that a temperature series for fresno ca follows a mean reverting brownian motion process with discrete jumps and autoregressive conditional heteroscedastic errors based on this process we define an equilibrium pricing model for cooling degree day weather options comparing option prices estimated with three methods a traditional burn rate approach a black scholes merton approximation and an equilibrium monte carlo simulation reveals significant differences equilibrium prices are preferred on theoretical grounds so are used to demonstrate the usefulness of weather derivatives as risk management tools for california specialty crop growers

a diffusion model incorporating product benefits price income and information we start by assuming that a major benefit of many new durable products such as dishwashers and microwave ovens is time savings others such as vcrs also enhance the value of our leisure time using a household production framework we demonstrate that a utility maximizing individual will have a reservation price for the product which is a function of the product benefits and his wage rate by assuming that the wage rate has an extreme value distribution across the population we are able to derive for the aggregate process an income price dependent logistic adoption equation we then allow for the possibility that certain eligible consumers may delay their purchase of the product because they are unaware that it exists are suspicious of its quality or expect its price to fall unawareness uncertainty and hope for further price declines are assumed to decrease with the increase in the number of previous adopters the resulting diffusion model has the property that the product life cycle phenomenon can be explained jointly or separately by the income price process and the awareness uncertainty expectations process using data on household income on durable penetration within different income classes and on first purchase sales the aggregate diffusion model and its premises are tested and supported it is found that both the income price and awareness uncertainty expectations processes are at work however the dependence of the awareness uncertainty expectations delay process on the number of previous adopters e g word of mouth type effect exists only in certain product categories and is usually relatively weak it is demonstrated that if the word of mouth type effects are weak a price skimming strategy is optimal for a monopolist and also is likely to be implemented by oligopolists the sales forecasting implications of the model also are pursued

innovation diffusion in the presence of supply restrictions innovation diffusion models are developed to represent the spread of a new product from its manufacturers to its ultimate users in the marketplace however the growth of a new product can be retarded by supply restrictions such as the unavailability of the product due to limitations on the production capacity or difficulties encountered in setting up distribution systems in the presence of supply restrictions diffusion models must be developed to capture the dynamics of supply restrictions and to allow management to evaluate the impact of such supply restrictions on the growth of a new product in the market place based on the bass innovation diffusion model the objective of this paper is to suggest a parsimonious diffusion model that integrates the demand side dynamics with the supply side restrictions the sensitivity of innovation diffusion patterns in the presence of supply restrictions is examined an application examining the diffusion of new telephones in israel is documented to illustrate the usefulness of the proposed model

social contagion and income heterogeneity in new product diffusion a meta analytic test standard diffusion models capture social contagion only coarsely and do not allow one to operationalize different contagion mechanisms moreover there is increasing skepticism about the importance of contagion and as has long been known s shaped diffusion curves can also result from heterogeneity in the propensity to adopt we present hypotheses about conditions under which specific contagion mechanisms and income heterogeneity are more pronounced and test these hypotheses using a meta analysis of the q p ratio in applications of the bass diffusion model the ratio is positively associated with the gini index of income inequality in a country supporting the heterogeneity in thresholds interpretation the ratio also varies as predicted by the gamma shifted gompertz diffusion model but the evidence vanishes after controlling for national culture as to contagion the q p ratio varies with the four hofstede dimensions of national culture for three of them in a direction consistent with the social contagion interpretation furthermore products with competing standards have a higher q p ratio which is again consistent with the social contagion interpretation finally we find effects of national culture only for products without competing standards suggesting that technological effects and culturally moderated social contagion effects might not operate independently from each other

evolutionary trends of industry variables abstract the paper offers empirical evidence on the evolutionary trends of industry variables it investigates the time path of patents product price and quantity and number of firms from the first introduction of a product to maturity of the market the paper extends earlier work by gort and klepper by expanding the data on products through 1991 and augmenting it with new products and new data sources the reexamination of the aging patterns reveal the gort and klepper results to be robust the time trends follow the expected patterns with remarkable consistency and are strongly significant for most products new evidence on patenting activity reveal an eventual decline in technological activity over the later years of the product market life cycle

the making of an oligopoly firm survival and technological change in the evolution of the u s tire industry the number of producers in the u s tire industry grew for 25 years and then declined sharply and the industry evolved to be an oligopoly the role of technological change in shaping the industry s market structure is explored a model of industry evolution featuring technological change is used to derive predictions that are tested using a novel data set on firm entry exit size location distribution networks and technological choices prior to the shakeout of producers consistent with the model earlier entering and larger firms survived longer principally because of the influence of age and size on technological change

global takeoff of new products culture wealth or vanishing differences the authors study the takeoff of 16 new products across 31 countries 430 categories to analyze how and why takeoff varies across products and countries they test the effect of 12 hypothesized drivers of takeoff using a parametric hazard model the authors find that the average time to takeoff varies substantially between developed and developing countries between work and fun products across cultural clusters and over calendar time products take off fastest in japan and norway followed by other nordic countries the united states and some countries of midwestern europe takeoff is driven by culture and wealth plus product class product vintage and prior takeoff most importantly time to takeoff is shortening over time and takeoff is converging across countries the authors discuss the implications of these findings

academic spin off s transfer speed analyzing the time from leaving university to venture for academic spin offs i analyze the length of time between the founder s leaving of academia and the establishment of his firm technology transfer can take place even years after leaving the mother institution a duration analysis reveals that a longer time lag is caused by the necessity of assembling complementary skills either by acquisition by a single founder or by searching for suitable team members furthermore new ventures are established earlier if the intensity of technology transfer is high the founders have access to university infrastructure or received informal support by former colleagues

demand heterogeneity and technology evolution the evolution of technology has been a central issue in the strategy and organizations literature however the focus of much of this work has been on what is essentially the supply side of techn

conceptualising the heterogeneity of research based spin offs a multi dimensional taxonomy abstract research based spin offs rbsos have become an important aspect of the technology transfer process emanating from what is conventionally a non commercial environment rbsos pose major challenges if they are to realise their potential to meet the objectives of their founders and the parent research organisations pros from which they emerge an important issue is to understand the heterogeneity of rbsos this paper reviews the literature on rbso typologies to develop a taxonomy of rbsos we identify common themes in relation to these typologies in relation to 1 spin off creation and 2 spin off development the dimensions that differentiate between firms are the type of resources the business model and the institutional link we identify gaps in current typologies in order to propose avenues for future conceptual and empirical research

regional drivers of on farm energy production in bavaria abstract bavaria s energy policy seeks to increase the share of power supply from renewable sources related to on farm energy production agricultural biogas wind and solar energy from currently 15 to more than 30 in 2021 it is therefore of particular interest for policy makers to identify regional drivers of and barriers to this concept the presented study addresses this issue and applies a spatial regression analysis to bavaria s 71 rural counties the findings indicate significant impacts of technological regional transformation ability agricultural structure degree of professionalization and consolidation of organic farming and neighborhood effects this is in contrast to most geographical factors which seem to be of minor relevance

strategic entry before demand takes off in developing industries firms have to decide whether and when to enter the market depending on the state of demand existing firms in the industry and the firm s capabilities this paper investigates a model of increasing demand in which firms decide when to enter the market anticipating the strategic behavior of other potential entrants and the effects of entry on future potential entrants this paper shows that the ability of early entry to deter future competitors entry leads firms to enter the market at a rate faster than demand is expanding if there is the potential for many firms to enter the market firms may be less likely to enter because of future competitor entry to correct any market opportunities if firms enter the market depending on their fixed capabilities rather than depending on the firm s circumstances at each moment in time firms end up entering the market at a faster rate in the early periods

the evolution of new industries and the determinants of market structure several empirical regularities concerning firm growth rates and industry firm size distributions have been developed by studying primarily mature industries the primary purpose of this article is to bring together and extend empirical regularities on the evolution of new industries and to use these regularities to gain further insight into the forces governing industry evolution to explain these regularities a model is constructed which emphasizes how factors governing the early evolution of industries may shape their market structure at maturity it stresses how chance events and exogenous factors that influence the number of potential entrants to the industry the growth rate of incumbents and the ease of imitation of industry leaders will influence the ultimate number and size distribution of firms in the industry

empirical generalizations and marketing science a personal view marketing has matured to the point where it seems desirable to take stock of where we are what we have learned and fruitful directions for extending the knowledge base that has developed science is a process involving the interaction between empirical generalizations and theory an empirical generalization is a pattern or regularity that repeats over different circumstances and that can be described simply by mathematical graphic or symbolic methods one of the purposes of the empirical generalizations conference held at wharton on february 16 18 1994 was to develop a list of examples of such empirical generalizations in marketing empirical generalization can precede a theory to explain it or it can be predicted by a theory science is the process of interaction between theory and data that leads to higher level theories examples are provided here of empirical generalizations in marketing and their theoretical counterparts one example is provided of a higher level theory

intergenerational hybrids spillbacks spillforwards and adapting to technology discontinuities during technological discontinuities incumbents frequently develop hybrids of competing technical generations although some prior work implies that such intergenerational hybrids may be the result of organizational dysfunction we propose that in some cases hybrids may be sophisticated learning tools that shape organizational adaptation to a technological discontinuity in this paper we suggest two mechanisms through which intergenerational hybrids may affect organizational adaptation spillbacks and spillforwards in an empirical test among the population of automobile carburetor manufacturers during a technological discontinuity we observe that organizations developing intergenerational hybrids capture spillback benefits knowledge spillovers from an emerging technology generation to the current generation furthermore we find that these same organizations also capture spillforwards spillover benefits from developing higher performing intergenerational hybrids that improve their product performance in the future technology generation these results suggest that intergenerational hybrids may be stepping stones for organizations to learn about and adapt to technology discontinuities

an equilibrium model of health insurance provision and wage determination we investigate the effect of employer provided health insurance on job mobility rates and economic welfare using a search matching and bargaining framework in our model health insurance coverage decisions are made in a cooperative manner that recognizes the productivity effects of health insurance as well as its nonpecuniary value to the employee the resulting equilibrium is one in which not all employment matches are covered by health insurance wages at jobs providing health insurance are larger in a stochastic sense than those at jobs without health insurance and workers at jobs with health insurance are less likely to leave those jobs even after conditioning on the wage rate we estimate the model using the 1996 panel of the survey of income and program participation and find that the employer provided health insurance system does not lead to any serious inefficiencies in mobility decisions

the life cycle of a competitive industry firm numbers first rise then later fall as an industry evolves this nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit equilibrium time paths for price and quantity also share features of the data the model is estimated using data from the u s automobile tire industry a particularly dramatic example of the nonmonotonicity in firm numbers

hedging size risk theory and application to the us gas market abstract many corporate commitments exhibit a combined financial exposure to both market prices and idiosyncratic size components e g volume load or business turnover we design a customized contract to optimally mitigate the risk of joint fluctuations in price and size terms the hedge is sought out among contingent claims written on price and any quoted index that is statistically dependent on commitment size closed form solutions are derived for the optimal custom hedge pay off and for the asset holdings of two market strategies one based on price linked forwards the other based on price linked and index linked forwards analytical hedges are obtained using a stylized lognormal market model detailed comparative statics provide a thorough analysis of optimal hedging pay off functions performance assessment is conducted in the context of the us gas market and a prototypical urban region results suggest that hedging through suitable custom claims written on price and an additional index significantly outperforms standard price based as well as mixed price index forward hedging alternatives our optimal custom hedge could be adopted as a benchmark for the relative assessment of any risk management solution

perception spillovers across competing brands a disaggregate model of how and when abstract drawing on the accessibility diagnosticity framework and previous literature on branding and order of entry the authors hypothesize that perception spillovers can also occur across directly competing products that do not share a common brand name the authors suggest two mechanisms prior perception spillover and dynamic perception spillover and one moderating variable product brand similarity to test for spillovers across competing brands the authors develop a structural bayesian learning model and estimate it using prescription choice and marketing communication data from a panel of physicians from their model results the authors find evidence of prior and dynamic perception spillovers across competing brands only when brands are sufficiently similar in contrast they find no evidence of spillover effects across brands that are highly dissimilar finally several policy experiments illustrate the strength and significance of competitive spillovers for product diffusion and from the re

sorting by search intensity abstract in this paper i characterize matching in an on the job search model with endogenous search intensity heterogeneous workers and firms and match surplus is shared between workers and firms through bargaining i provide proof of existence and uniqueness of steady state equilibrium given equally efficient matched and unmatched search the worker skill conditional distribution of firm productivity over matches is stochastically increasing decreasing in worker skill if the production function is supermodular submodular i also show that this strong notion of sorting does not obtain everywhere for the firm productivity conditional match distribution

the red queen effect competitive actions and firm performance we investigate the red queen effect as a contest of competitive moves or actions among rivalrous firms the results from a multi industry study of over 4 700 actions confirms the existence of red q

a dynamic model of entry and exit in a growing industry the potential demand in a new industry evolves over time demand is initially low but advertising by the industry s early entrants can speed up demand growth however there is intrinsic uncertainty of the demand level in each period and uncertainty of the demand evolution path which can be affected by the underlying economic environment we construct a dynamic model that features the stochastically and endogenously expanding demand of a new industry and we investigate the optimal entry and exit behavior of firms as the industry evolves we find that firms incentive to enter early depends critically on the cost that early entrants have to pay in developing the market when the cost is high and the benefit spills over to potential entrants firms have an incentive to wait and the probability of entry can increase with the number of incumbents under certain circumstances firms entry strategy is also influenced by the transition of economic states firms are more likely to enter under a state that shows the prospect of demand taking off soon we also find that in the early stage of an industry higher demand uncertainty can induce faster entry

licensing radical product innovations to speed up the diffusion abstract we present a differential game to study how companies can simultaneously license their innovations to other firms when launching a new product the licensee may cannibalize licensor s sales albeit this can be compensated by gains from royalties nonetheless patent royalties are generally so low that licensing is not an attractive strategy in this paper we consider the role of licensing to speed up the product diffusion word of mouth by licensee s customers and licensee s advertising indirectly push forward sales of the licensing company accelerating new product diffusion we find evidence that licensing can be a potentially profitable strategy however we also find that a weak intellectual property right ipr protection can easily diminish the financial attractiveness of licensing

the effects of advertising prices and distribution on market share volatility although the influence of marketing decision variables on market share has received ample attention in the literature less is known about their effects on volatility this study attempts to shed light on this issue by empirically examining the effects of advertising pricing and distribution not only on market share but also on its volatility using an egarch model we argue that establishing a link between management controlled actions such as advertising pricing and distribution and market share volatility may benefit firms seeking to reduce uncertainty in their market share performance application of the proposed model to data on two markets suvs and minivans suggested that advertising pricing and distribution significantly influence market share volatility

an empirical model of wage dispersion with sorting we estimate an equilibrium on the job search model with endogenous search intensity workers differ by skill firms by productivity workers respond to mismatch by intensive search and sorting may result from complementarities in the match level production function the model is estimated on danish matched employer employee data firms are ranked through revealed preference by the fraction of hires that is poached from other firms the poaching rank identification is obtained by firm rank conditional mobility and wage patterns wage variation is decomposed into four sources sorting 40 worker heterogeneity 32 firm heterogeneity 18 and frictional competition 10 a social planner can improve output net of search cost by 1 5 relative to the decentralized solution

an equilibrium pricing model for weather derivatives in a multi commodity setting many industries are exposed to weather risk weather derivatives can play a key role in hedging and diversifying such risk because the uncertainty in a company s profit function can be correlated to weather condition which affects diverse industry sectors differently unfortunately the weather derivatives market is a classical example of an incomplete market that is not amenable to standard methodologies used for derivative pricing in complete markets in this paper we develop an equilibrium pricing model for weather derivatives in a multi commodity setting the model is constructed in the context of a stylized economy where agents optimize their hedging portfolios which include weather derivatives that are issued in a fixed quantity by a financial underwriter the supply and demand resulting from hedging activities and the supply by the underwriter are combined in an equilibrium pricing model under the assumption that all agents maximize some risk averse utility function we analyze the gains due to the inclusion of weather derivatives in hedging portfolios and examine the components of that gain attributable to hedging and to risk sharing

monopolist pricing with dynamic demand and production cost this paper deals with pricing of a new product over time by a monopolist who maximizes the discounted profit stream the interdependency of cost and demand on cumulative production makes the problem inherently dynamic cost is assumed to be declining with cumulative production learning curve effect while demand is a function of price and cumulative sales representing word of mouth and saturation effects the paper addresses this problem in a general framework that includes several previous results as special cases and provides new insights in other situations while the learning curve and word of mouth effect cause prices to be lower than the price that maximizes immediate revenues the saturation factor has the opposite effect the price path over time is affected by these factors and the interest rate we characterize the price path under several different situations and interpret the results for policy guidelines