Optimal dynamics of technology and price in a duopoly market

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This article examines a case where the demand of a new product follows an applied diffusion model influenced by innovation and price differential effects, and the potential market size expands as the technology level embodied in the product advances. For a duopoly, we set up a differential game model and derived open-loop Nash equilibrium solutions, showing that the optimal dynamics between the competitors' technology and price levels depend on the relative magnitude of innovation and price differential coefficients. If the price differential coefficients of the two competitors are symmetrical, the optimal prices become constant and in general the technology levels increase.
Publisher
ROUTLEDGE JOURNALS
Issue Date
2012
Language
English
Article Type
Article
Keywords

SUPPLY CHAIN; MODEL; QUALITY; INNOVATIONS; COMPETITION; STRATEGIES; DEMAND; CHOICE

Citation

APPLIED ECONOMICS LETTERS, v.19, no.11, pp.1017 - 1022

ISSN
1350-4851
DOI
10.1080/13504851.2011.610737
URI
http://hdl.handle.net/10203/98861
Appears in Collection
MT-Journal Papers(저널논문)
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