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Innovation in a generalized timing game

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  • Smirnov, Vladimir
  • Wait, Andrew

Abstract

We examine innovation as a market-entry timing game with complete information and observable actions. We characterize all pure-strategy subgame perfect equilibria for the two-player symmetric model allowing both the leader’s and the follower’s payoff functions to be multi-peaked, non-monotonic and discontinuous. We provide sufficient conditions for when the equilibria can be Pareto-ranked and when the equilibrium is unique. Economic applications discussed include process and product innovation and the timing of the sale of an asset.

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  • Smirnov, Vladimir & Wait, Andrew, 2015. "Innovation in a generalized timing game," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 23-33.
    • Handle: RePEc:eee:indorg:v:42:y:2015:i:c:p:23-33
    DOI: 10.1016/j.ijindorg.2015.06.003
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    1. Smirnov, Vladimir & Wait, Andrew, 2021. "Preemption with a second-mover advantage," Games and Economic Behavior, Elsevier, vol. 129(C), pages 294-309.
    2. Steg, Jan-Henrik, 2022. "On identifying subgame-perfect equilibrium outcomes for timing games," Games and Economic Behavior, Elsevier, vol. 135(C), pages 74-78.
    3. Maxime Menuet & Petros G. Sekeris, 2022. "Engaging in Wars of Attrition," Annals of Economics and Statistics, GENES, issue 147, pages 79-100.
    4. Omolbanin Jalali & Zahra Nasrollahi & Madjid Hatefi Madjumerd, 2019. "An Experimental Study of Incentive Reversal in Sequential and Simultaneous Games," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 23(3), pages 639-658, Summer.
    5. Dawid, Herbert & Muehlheusser, Gerd, 2022. "Smart products: Liability, investments in product safety, and the timing of market introduction," Journal of Economic Dynamics and Control, Elsevier, vol. 134(C).
    6. Smirnov, Vladimir & Wait, Andrew & Xu, Rong, 2018. "Timing of entry with heterogeneous firms," Working Papers 2018-11, University of Sydney, School of Economics.
    7. Wang, Rong-Kuan & Hu, Die, 2017. "Time-cost substitutability, earlycutting threat, and innovation timing," Economics Letters, Elsevier, vol. 156(C), pages 88-91.
    8. Smirnov, Vladimir & Wait, Andrew, 2015. "Innovation in a generalized timing game," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 23-33.

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    More about this item

    Keywords

    Timing games; Entry; Leader; Follower; Process innovation; Product innovation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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