optimal dynamic marketing mix policies for frequently purchased products and services versus consumer durable goods a generalized analytic approach abstract this paper deals with the qualitative characterization of optimal pricing and advertising policies together with the optimal ratio of the advertising elasticity of demand to its price elasticity over time the problem is studied for frequently purchased products and services fps as well as consumer durable goods cdg in both monopolistic and duopolistic markets demand dynamics cost learning and discounting of future profits are taken into consideration in addition both the open loop and feedback methodologies are pursued to characterize and compare the derived optimal policies the paper uses an analytical approach to characterize the optimal dynamic policies in a general setting as is mathematically tractable followed by the analysis of more specific models to gain additional managerial insights while maintaining a certain degree of generality optimal fps marketing mix policies are shown to be different from their cdg counterparts for both monopolistic and duopolistic markets while the ratio of advertising elasticity to price elasticity appears to have been governed by similar set of rules for fps and cdg the direction of change of such ratio over time looks different from each other managerial implications and directions for future research are also discussed

optimal product launch times in a duopoly balancing life cycle revenues with product cost we present a model describing the demand dynamics of two new products competing for a limited target market the demand trajectories of the two products are driven by a market saturation effect and an imitation effect reflecting the product experience of previous adopters in this general setting we provide analytical results for the sales trajectories and life cycle sales of the competing products we use these results to study the impact of launch time on overall life cycle sales we consider the perspective of one of the competing products and model the trade off between the lost revenues resulting from a delayed launch and the lower unit production costs we find that the profit maximizing launch time exhibits a counterintuitive behavior in particular we show that a firm facing a launch time delay from a competing product might benefit from accelerating its own product launch as opposed to using the softened competitive situation to further improve its cost position we identify conditions under w

the structure of licensing contracts industrial organization theory has explored several issues related to licensing but empirical analyses are extremely rare we amass a new and detailed dataset on licensing contracts and use it to present some simple facts concerning licensing behavior our analysis reveals robust cross industries differences in several contractual features such as exclusivity cross licensing ex ante versus ex post technology transfers and licensing to related versus unrelated parties we offer an interpretation of these facts based on cross industry variation in the strength of intellectual property rights

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

gender differences in firm performance evidence from new ventures in the united states abstract prior studies examining the performance of female and male owned firms have generally reported that female owned firms underperform male owned firms however it is conceivable that the performance measures used by previous studies and or their inability to control for key demographic differences may have contributed to this finding for example few studies use size adjusted performance measures and yet we know that female owned firms tend to be smaller than their male counterparts similarly risk is typically not considered even though evidence suggests that women tend to be more risk averse than men we use a longitudinal five year database of more than 4000 new ventures that began operations in the u s in 2004 to determine whether potential differences in the performances of female and male owned firms disappear when appropriate performance measures are used and important demographic differences are controlled for in the models the performance measures we examine include 4 year closure rates return on assets roa and a risk adjusted measure sharpe ratio univariate test results confirm our expectation based on both liberal and social feminist theory that there is no difference in the performance of female and male owned new ventures provided performance is appropriately measured further these results are supported by our multivariate analyses which control for demographic differences such as industry experience and hours worked our findings should be of interest to researchers financiers advisors and policy makers perhaps more importantly our findings should also ensure that women who are contemplating starting a new venture are not discouraged from doing so by a false belief that new ventures initiated by women are less likely to succeed than those initiated by men

running in the family parental role models in entrepreneurship it is well established that children of self employed parents are more likely to become self employed themselves but the reasons are still hotly debated using danish register data we investigate the importance and workings of parental role models for the probability of becoming self employed we find that the effect of a self employed father mother is much higher for males females these results are statistically and economically very significant and they survive when we control for parental wealth and work experience from the parents firms and when we exclude cases where the offspring takes over the family business this points to a strong role for parental role models in explaining why self employment runs in the family

rich dad smart dad decomposing the intergenerational transmission of income we construct a simple model consistent with becker and tomes that decomposes the intergenerational income elasticity into the causal effect of financial resources the mechanistic transmission of human capital and the role that human capital plays in the determination of fathers permanent incomes we show how a particular set of instrumental variables could separately identify the money and human capital transmission effects using data from a 35 percent sample of swedish sons and their fathers we show that only a minority of the intergenerational income elasticity can be plausibly attributed to the causal effect of fathers financial resources

parents performance in entrepreneurship as a double edged sword for the intergenerational transmission of entrepreneurship we investigate how perceived parents performance in entrepreneurship ppe affects the entrepreneurial career intentions of offspring we argue that while perceived ppe enhances offspring s perceived entrepreneurial desirability and feasibility because of exposure mechanisms it inhibits the translation of both desirability and feasibility perceptions into entrepreneurial career intentions due to upward social comparison mechanisms thus perceived ppe acts as a double edged sword for the intergenerational transmission of entrepreneurship our predictions are tested and confirmed on a sample of 21 895 individuals from 33 countries this study advances the literature on intergenerational transmission of entrepreneurship by providing a foundation for understanding the social psychological conditions necessary for such transmission to occur

dynamic optimal control of process product innovation with learning by doing abstract in this paper we present a dynamic optimal control model of process product innovation with learning by doing and extend the model of chenavaz 2012 to an even more general model in which the firm s cost functions of product and process innovation depend on both the innovation investments and the knowledge accumulations of product and process innovation furthermore in our paper the product price the investments of product and process innovation are decision variables the product quality production cost the change rates of knowledge accumulations of product and process innovation are state variables the main objective of this paper is to analyze the relationships between these variables and investigate the model s optimal conditions and characteristics further we solve the model with some numerical examples and sensitivity analysis is conducted to study the effect of changing the parameters and coefficients on the objective function value

optimum advertising policy over time for subscriber service innovations in the presence of service cost learning and customers disadoption abstract on the theoretical side this paper characterizes qualitatively optimal advertising policy for new subscriber services a monopolistic market is analyzed first for which customers disadoption discounting of future profits streams and a service cost learning curve are allowed after characterizing the optimal policy for a general diffusion model the results pertaining to a specific diffusion model for which advertising affects the coefficient of innovation that incorporates the disadoption rate are reported the results of the theoretical research show that the advertising policy of the service firm in the presence of customers disadoption could be very different from the same when disadoption is ignored on the empirical side four alternative diffusion models are estimated and their predictive powers using a one step ahead forecasting procedure compared the diffusion data analyzed are related to the canadian cable tv industry empirical research findings suggest that the specific diffusion model considered above is not only of theoretical appeal but also of major empirical relevance the analytical findings of the study are documented in six theoretical propositions for which proofs are provided in a separate appendix the results of a related numerical experiment together with the analytical findings pertaining to the competitive role of advertising are included managerial implications of the study together with directions for future research are also discussed

entrepreneurial success and occupational inheritance among proprietors roughly 50 percent of self employed proprietors are second generation proprietors these individuals acquire informal business experience while growing up in the context of a family business since some of this informal experience substitutes for more formally acquired schooling measured rates of return to the latter will not be as high as for wage salary workers early acquisition of managerial human capital that can be acquired only through experience implies differentially greater proprietary success for second generation proprietors compared with first generation proprietors the authors present evidence in favor of both hypotheses

the effect of early entrepreneurship education evidence from a field experiment the aim of this study is to analyze the effectiveness of early entrepreneurship education to this end we conduct a randomized field experiment to evaluate a leading entrepreneurship education program that is taught worldwide in the final grade of primary school we focus on pupils development of entrepreneurship knowledge and a set of non cognitive skills relevant for entrepreneurial activity the results indicate that knowledge is unaffected by the program however the program has a robust positive effect on non cognitive entrepreneurial skills this is surprising since previous evaluations found zero or negative effects because these earlier studies all pertain to entrepreneurship education for adolescents our result tentatively suggests that non cognitive entrepreneurial skills are best developed at an early age as the entrepreneurship program has various features besides its entrepreneurship content we must leave it to future research to determine which specific element has the greatest impact on the development of non cognitive entrepreneurial skills

intergenerational transmissions in immigrant self employment evidence from three generations this paper presents the first study of intergenerational transmissions in immigrant self employment across three generations based on a swedish data set the results show that having a self employed father as well as having a self employed grandfather has a positive effect on self employment propensities for male third generation immigrants for native swedes having a self employed father is of importance for self employment propensities while having a self employed grandfather is not evidently there appears to be a generational link in self employment across three generations for immigrants but not for natives since immigrants transfer general self employment abilities third generation immigrants with self employed ancestors are over represented in self employment many of them however are not necessarily in the same business line as their fathers in contrast when natives transfer general self employment abilities their offspring tend to become self employed in the same business line as their fathers

optimal pricing and advertising in a durable good duopoly abstract this paper analyzes dynamic advertising and pricing policies in a durable good duopoly the proposed infinite horizon model while general enough to capture dynamic price and advertising interactions in a competitive setting also permits closed form solutions we use differential game theory to analyze two different demand specifications linear demand and isoelastic demand for symmetric and asymmetric competitors we find that the optimal price is constant and does not vary with cumulative sales while the optimal advertising is decreasing with cumulative sales comparative statics for the results are presented

patents licensing and market structure in the chemical industry abstract the strategies of rent appropriation and industry structure are inter dependent how firms use patents depends upon industry structure and in turn affects industry structure in the 19th century market leaders in the chemical industry combined patents and secrecy to deter entry within cartels patents were used to stabilize cartels and organize technology licensing the role of patents changed in the less concentrated post world war ii markets in bulk organic chemicals and petrochemicals chemical producers use licensing as an important means of generating revenue from process innovations the increased importance of technology licensing is closely related to the emergence of a class of specialized process design and engineering firms that have played an important role in the development and diffusion of process innovations

on the origins of entrepreneurship evidence from sibling correlations we assess the broad importance of family and community background for entrepreneurship outcomes we go beyond traditional intergenerational associations by estimating sibling correlations in unincorporated and incorporated entrepreneurship using register data from sweden sibling correlations range from 20 to 50 they are consistently higher for more committed and incorporated entrepreneurship than for less committed or unincorporated entrepreneurship they are also higher for brothers than sisters we then assess what factors drive these correlations parental entrepreneurship neighborhoods shared genes and financial resources help explain these high correlations whereas immigration status family structure and sibling peer effects have a limited contribution the higher correlation for incorporated versus unincorporated entrepreneurship is explained mainly by the type of parental entrepreneurial engagement and financial resources while the gap between brother and sister correlations in unincorporated entrepreneurship is largely driven by the geographic concentration of male dominated industries

the impact of entrepreneurship education on entrepreneurship skills and motivation this paper analyzes the impact of a leading entrepreneurship education program on college students entrepreneurship skills and motivation using an instrumental variables approach in a difference in differences framework we exploit that the program was offered to students at one location of a school but not at another location of the same school location choice and thereby treatment is instrumented by the relative distance of locations to parents place of residence the results show that the program does not have the intended effects the effect on students self assessed entrepreneurial skills is insignificant and the effect on the intention to become an entrepreneur is even negative

hierarchies and entrepreneurship we establish a correlation between the hierarchical structure of a firm and the likelihood of business creation among its former employees using a sample of 16 million observations of swedish workers and a novel proxy for hierarchies based on occupation data conditional on firm size and many other variables employees in firms with more layers are less likely to enter entrepreneurship to become self employed and to switch to another employer the effects of layers are much stronger for business creation than for job switching and they are stronger for entrepreneurship than for self employment we discuss two potential explanations for the distinctive hierarchy effect we find part of the effect could be to be due to preference sorting by employees and part due to employees in firms with fewer layers having a broader range of skills one test showing that the probability of entrepreneurship increases with their prior rank in an organization is consistent with ability sorting and inconsistent with preference sorting

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

marginal deterrence in enforcement of law we characterize optimal enforcement in a setting in which individuals can select among various levels of some activity all of which are monitored at the same rate but may be prosecuted and punished at varying rates for less harmful acts marginal expected penalties ought to fall short of marginal harms caused indeed some range of very minor acts should be legalized for more harmful acts whether marginal expected penalties should fall short of or exceed marginal harms depends on the balance between monitoring and prosecution punishment costs we also explore how the optimal enforcement policy varies with changes in these costs

entrepreneurship and the intergenerational transmission of values there is mounting empirical evidence that there is intergenerational transmission of parental preferences for entrepreneurship however much of the work on this topic is not explicit about the role of values in this transmission process furthermore nearly all studies neglect potential heterogeneity of values among entrepreneurial parents this paper contributes to the literature by making use of a natural experiment that allows 1 identifying a group of entrepreneurial parents who have a distinct priority of challenging existing conditions mastery and 2 detecting whether this value orientation is transmitted comparing german entrepreneurs two decades after reunification reveals that the children of self employed parents who encountered a great deal of resistance in the socialist german democratic republic due to their self employment are much more likely to give mastery as the reason for running their own venture compared to entrepreneurs whose parents did not have to overcome this sort of challenge

regional unemployment self employment and family background this paper analyses the role of regional unemployment on self employment the paper argues that family background separates individuals with respect to the effect of unemployment the empirical analysis is based on data on a sample of finnish residents aged 0 14 years in 1970 whose subsequent employment is examined the results show that high unemployment in a region pushes individuals from self employed families into self employment while it has the opposite effect on individuals from wage earner families the push effect seems to work only among those individuals who already have entrepreneurial skills through their family background

family background and income during the rise of the welfare state brother correlations in income for swedish men born 1932 1968 we investigate if the association between family background and income in sweden has changed for men born between 1932 and 1968 our main finding is that the share of the variance in long run income that is attributable to family background the so called brother correlation in income has fallen by some 17 from 0 49 for the cohorts of brothers born in the early 1930s to below 0 32 for the cohorts born around 1950 from then on the correlations have inched back up to around 0 37 we report suggestive evidence that the decline is driven by changes in education

obtaining strategic advantage from being imitated when can encouraging clones pay an important business strategy research theme concerns finding ways to minimize competition faced by the firm this paper however focuses on a different set of situations the model developed suggests that an innovator s best strategy may be to encourage clones of its product when a network externality is present key factors to consider in assessing whether encouraging cloning is the innovator s best strategy are 1 the benefit to be derived in terms of added user base contributed by the clone sales traded off against 2 the unit sales that will be lost to the clones these factors in turn depend upon the strength of the network effect and the degree to which the innovator s product quality is perceived by consumers to be superior to the clone s the model further suggests that both the innovator and clone earn their highest payoffs when the clone takes the lead in price setting i e when the clone establishes its own price by considering for each price it might set how the innovator will react to that price and the innovator as price follower responds to the price the clone chooses the paper demonstrates that the clone leader innovator follower situation represents the unique nash equilibrium in price setting strategies a central implication is that when operating in a network externality environment instead of a problem to be avoided clones may be valuable assets to an innovating firm building up the user base for the innovator s technology by bringing lower valuing consumers into the market which in turn makes the innovator s product more attractive to high and medium valuing purchasers thus when the above described conditions hold being cloned can be more profitable for an innovating firm than dominating the market alone

ethnic enclaves and the economic success of immigrants evidence from a natural experiment recent immigrants tend to locate in ethnic enclaves within metropolitan areas the economic consequence of living in such enclaves is still an unresolved issue we use an immigrant policy initiative in sweden when government authorities distributed refugee immigrants across locales in a way that may be considered exogenous this policy initiative provides a unique natural experiment which allows us to estimate the causal effect on labor market outcomes of living in enclaves we find substantive evidence of sorting across locations when sorting is taken into account living in enclaves improves labor market outcomes for instance the earnings gain associated with a standard deviation increase in ethnic concentration is in the order of four to five percent

the inaugural isms practice prize competition isms practice prize competition chairman gary l lilien special section introduction by the isms practice prize competition chairman finalists joseph a foster peter n golder gerard j tellis predicting sales takeoff for whirlpool s new personal valet john h roberts pamela d morrison charles j nelson implementing a prelaunch diffusion model measurement and management challenges of the telstra switching study

optimal pricing strategy for new products robinson and lakhani 1975 initiated a long research stream in marketing when they used the bass model 1969 to develop optimal pricing path for a new product a careful analysis of the extant literature reveals that the research predominantly suggests that the optimal price path should be largely based on the sales growth pattern however in the real world we rarely find new products that have such pricing pattern we observe either a monotonically declining pricing pattern or an increase decrease pricing pattern that does not seem close to the sales path in this paper we use a variation of the generalized bass model called gbm developed by bass et al 1994 that yields optimal pricing policies that are consistent with empirical data

optimal pricing strategies for new products in dynamic oligopolies this paper deals with the determination of optimal pricing policies for firms in oligopolistic markets the problem is studied as a differential game and optimal pricing policies are established as nash open loop controls cost learning effects are assumed such that unit costs are decreasing with cumulative output discounting of future profits is also taken into consideration initially the problem is addressed in a general framework and we proceed to study some specific cases that are related to models presented in recent literature three basic classes of sales dynamics are analyzed competition with price effects only competition with price as well as adoption effects and competition with adoption effects only in some cases it turns out that results which hold for the monopoly case carry over to the multi firm case in the sense that the qualitative structure of optimal pricing strategies is the same in the monopoly and the oligopoly cases however due to competitive interdependencies differences certainly exist in the levels as well as the rates of change of optimal prices

an empirical analysis of dynamic nonprice competition in an oligopolistic industry this article develops a dynamic model of nonprice competition in an oligopolistic industry and uses it to analyze advertising competition in the u s cigarette industry the model generalizes existing studies by allowing advertising to affect both firm market shares and the total size of the market the model also allows dynamic conjectural variations to arise from the intertemporal links created by the durability of advertising we use these dynamic conjectural variations to distinguish alternative models of competitive interaction we estimate the complete model of firm production demand and advertising choice by using data for u s cigarette producers the results indicate that firm advertising primarily affects the level of market demand with a firm s effect on rival firms market shares arising through variations in the number of brands sold empirical results on firm behavior suggest that firms act as if their advertising choices will alter the future advertising choices of rival firms in both the high tar and low tar cigarette markets

licensing the market for technology abstract in technology based industries incumbent firms often license their technology to potential competitors such a strategy is difficult to explain within traditional models of licensing this paper extends the literature on licensing by relaxing the assumption of a monopolist technology holder competition in the market for technology induces licensing of innovations and incumbent firms may find it privately profitable to license although their joint profits may well be higher in the absence of any licensing a strong testable implication of our model is that the number of licenses per patent holder decreases with the degree of product differentiation

licensing under general demand and cost functions abstract we consider a cournot duopoly under general demand and cost functions where an incumbent patentee has a cost reducing technology that it can license to its rival by using combinations of royalties and upfront fees two part tariffs we show that for drastic technologies a licensing occurs and both firms stay active if the cost function is superadditive and b licensing does not occur and the patentee monopolizes the market if the cost function is additive or subadditive for non drastic technologies licensing takes place provided the average efficiency gain from the cost reducing technology is higher than the marginal gain computed at the licensee s reservation output optimal licensing policies have both royalties and fees for significantly superior technologies if the cost function is superadditive by contrast for additive and certain subadditive cost functions optimal licensing policies have only royalties and no fees

growing growing gone cascades diffusion and turning points in the product life cycle research on the product life cycle plc has focused primarily on the role of diffusion this study takes a broader theoretical perspective on the plc by incorporating informational cascades and developing and testing many new hypotheses based on this theory on average across 30 product categories the authors find that i new consumer durables have a typical pattern of rapid growth of 45 per year over 8 years ii this period of growth is followed by a slowdown when sales decline by 15 and stay below those of the previous peak for 5 years iii slowdown occurs at 34 population penetration and about 50 of ultimate market penetration iv products with large sales increases at takeoff tend to have larger sales declines at slowdown v leisure enhancing products tend to have higher growth rates and shorter growth stages than nonleisure enhancing products time saving products tend to have lower growth rates and longer growth stages than nontime saving products vi lower probability of slowdown is associated with steeper price reductions lower penetration and higher economic growth vii a hazard model can provide reasonable predictions of the slowdown as early as the takeoff the authors discuss the implications of these findings

marginal deterrence at work abstract the marginal deterrence principle of law enforcement implies that penalties must be scaled according to the severity of crimes in order to deter individuals from committing more severe offenses in this paper we test whether the us legal system is consistent with the rational economic model of marginal deterrence to this purpose we use novel and unique data on sentence length for a large sample of inmates in us correctional facilities combined with an official ranking of crimes by severity and with proxies for the maximum possible punishment and for the cost of monitoring criminals specifically the cost of policing in each us state over a period spanning up to 50 years we find that sentences are on average longer in states where maximum punishment is higher and monitoring cost is lower we document that these relations are systematically stronger in states where the private benefits from crime are more heterogeneous finally we show that sanctions increase relatively faster with the severity of crimes in states with higher maximum punishment and lower monitoring cost overall these results point to the rational economic model of marginal deterrence as providing a reasonable description of the actual enforcement policies chosen by regulators

dynamic advertising strategies of competing durable good producers this work develops a diffusion model which incorporates word of mouth and advertising effects for two firms introducing competing brands of a new durable product the competition between the two firms is formulated as a two player nonzero sum markovian game the firms are assumed to behave noncooperatively in choosing their advertising strategies and the solution concept is a nash noncooperative equilibrium optimal advertising policies for this stochastic closed loop control problem are obtained via dynamic programming our results indicate that both firms will start with high advertising outlays which will get reduced as the number of adopters increases this is similar to the result obtained previously for a monopolist further we find that there is a significant value in being the first brand to the market and the greater the intensity of word of mouth effects the greater the value in being first the first entrant advantage is due to the goodwill generated by its stock of previous adopters this first entrant advantage can only be overcome if the second entrant enters with a superior brand which is more enthusiastically endorsed by its adopters

a diffusion theory model of adoption and substitution for successive generations of high technology products this study deals with the dynamic sales behavior of successive generations of high technology products new technologies diffuse through a population of potential buyers over time therefore diffusion theory models are related to this demand growth furthermore successive generations of a technology compete with earlier ones and that behavior is the subject of models of technological substitution building upon the bass bass f m 1969 a new product growth model for consumer durables management sci 15january 215 227 diffusion model we develop a model which encompasses both diffusion and substitution we demonstrate the forecasting properties of the model by estimating parameters over part of the data and projecting shipments for later periods

marginal deterrence when offenders act sequentially marginal deterrence concerns the incentives created by criminal penalties for offenders to refrain from committing more harmful acts we show that when offenders act sequentially it is often optimal for the level of the sanction not just the expected sanction to rise with the severity of the act even when enforcement is specific

transition to entrepreneurship from the public sector predispositional and contextual effects studies of career dynamics implicitly claim that government employees are not entrepreneurial utilizing longitudinal data from the u s panel study for income dynamics we investigate the reasons for the low rate of entrepreneurship from the public sector we conjecture that it is due to labor market matching processes and the bureaucratic nature of public organizations and bureaucratization of individuals our life course analysis identifies labor market matching as a major determinant nonentrepreneurial types choose public sector employment we also uncover tenure and context effects which decrease and increase the hazard rate of entrepreneurial exit respectively whereas the former effect points toward adaptation and internal labor market sorting the latter draws attention to exits due to frustration

licensing to enhance demand for new technologies this article presents a model in which licensing competitors expands demand for a new proprietary product and therefore may be a profit maximizing strategy for the licensor even when licensing increases industry cost in the model buyers care about price and quality sellers can contract on price but not on quality and a single supplier has monopoly power licensing induces quality competition and allows the supplying firms to make a quality commitment that would not be credible for a single firm as a result licensing increases industry demand and may generate an increase in industry revenue sufficient to offset any increase in industry cost some of the characteristics of the model are informed by observations in the semiconductor industry

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

spillovers in education choice abstract this paper examines how skills are shaped by social interactions in families we show that older siblings causally affect younger sibling s educational choices and early career earnings we focus on critical course choices in high school and overcome the identification challenges of estimating spillover effects in education by exploiting exogenous variation in choice sets stemming from a pilot program the pilot induced an essentially random subset of older siblings to choose advanced math science at a lower cost while not directly affecting the course choices of younger siblings we find that younger siblings are 2 3 percentage points more likely to choose math science if their older sibling unexpectedly could choose math science at a lower cost we argue that the main influence of the pilot program on the younger siblings may be attributed to the social influence of the older sibling spillovers are strongest among closely spaced siblings in particular brothers and they have a lasting impact on the career outcomes of younger brothers we argue that competition is likely one of the driving forces behind younger siblings conforming to their older siblings choices

experimentation and the returns to entrepreneurship previous studies have argued that entrepreneurs earn less and bear more risk than salaried workers with otherwise similar characteristics in a simple model of entrepreneurship i show that estimates of mean and variance of returns to entrepreneurship used by these previous studies are biased as they fail to account for the option value of experimenting with new ideas using longitudinal data i find patterns that are consistent with entrepreneurship as experimentation and returns to entrepreneurship that are more attractive than established by previous research