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Two state capital accumulation with heterogenous products: Disruptive vs. non-disruptive goods

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  • Caulkins, Jonathan P.
  • Feichtinger, Gustav
  • Grass, Dieter
  • Hartl, Richard F.
  • Kort, Peter M.

Abstract

The paper considers the problem of a firm that, while producing a standard product, has the option to introduce an innovative product. The innovative product competes with the standard product and will therefore reduce revenues of the standard product. A distinction is made between innovative products that do or do not become even more relatively appealing as their market share grows (e.g., because of network externalities). It is shown that in the former case, which we call a "disruptive" good, history dependent long run equilibria can occur, which are in line with recent real life economic examples.

Suggested Citation

  • Caulkins, Jonathan P. & Feichtinger, Gustav & Grass, Dieter & Hartl, Richard F. & Kort, Peter M., 2011. "Two state capital accumulation with heterogenous products: Disruptive vs. non-disruptive goods," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 462-478, April.
    • Handle: RePEc:eee:dyncon:v:35:y:2011:i:4:p:462-478
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    References listed on IDEAS

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    Cited by:

    1. Grass, D., 2012. "Numerical computation of the optimal vector field: Exemplified by a fishery model," Journal of Economic Dynamics and Control, Elsevier, vol. 36(10), pages 1626-1658.
    2. Dawid, Herbert & Kopel, Michael & Kort, Peter M., 2013. "New product introduction and capacity investment by incumbents: Effects of size on strategy," European Journal of Operational Research, Elsevier, vol. 230(1), pages 133-142.
    3. repec:uto:dipeco:201338 is not listed on IDEAS
    4. Herbert Dawid & Michael Kopel & Peter M. Kort, 2020. "Product innovation with partial capacity rollover," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(2), pages 479-496, June.
    5. Privileggi, Fabio, 2015. "Takeoff vs. stagnation in endogenous recombinant growth models," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 108(C), pages 184-214.

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