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Timing of Innovations Under Rivalry
Morton I. Kamien
Nancy L. Schwartz
Abstract
The choice of development period and consequent introduction time for a single innovation by an expected profit maximizing firm operating under conditions of rivalrous competition is studied. Factors taken into account by the firm are the increasing cost with compression of the development period, the reduction of profit opportunities with prolongation of the development period, and the probability of rival innovation and imitation which affect the potential rewards available to the firm. Comparisons is made with the timing that would be selected in the absence of rivalry. The effects of intense rivalry are also examined.
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