Price competition in the presence of rapid innovation and imitation: the case of digital cameras

Author: Thompson, S.

Source: Economics of Innovation and New Technology, Volume 18, Number 1, 2009 , pp. 93-106(14)

Publisher: Routledge, part of the Taylor & Francis Group

Abstract:

High-tech rivalry typically involves sellers introducing a sequence of models each offering greater capacity/functionality. Given heterogeneous consumers this both creates and erodes any quality/novelty premium as innovation segments the market and imitation then populates the segments so created. We present a hedonic price analysis using a unique US digital camera database. This confirms the intensity of the quality-adjusted price fall and the dominance of vertical differentiation and identifies a premium for frontier models.

Keywords: imitative entry; innovative entry; hedonic pricing

Document Type: Research article

DOI: http://dx.doi.org/10.1080/10438590701672165

Affiliations: 1: The Business School, University of Nottingham, Nottingham, UK

Publication date: 2009-01-01

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