TY - JOUR
T1 - Entry patterns over the product life cycle
AU - Gutiérrez, Óscar
AU - Ruiz-Aliseda, Francisco
PY - 2009/9/1
Y1 - 2009/9/1
N2 - We study a game-theoretic real options model of new market entry based on empirical evidence of demand for a new product growing over time and eventually falling. Yet, firms do not know ex ante when this will occur, which creates incentives to update information by delaying irreversible entry. By assuming that the construction of a new productive plant takes some time and is unobservable in the meantime, while operation in the market is not, we show that entry rates increase or decrease under certain conditions related to the rate at which flow profits decrease as more firms enter the industry. © 2009 Blackwell Publishing Ltd and The University of Manchester.
AB - We study a game-theoretic real options model of new market entry based on empirical evidence of demand for a new product growing over time and eventually falling. Yet, firms do not know ex ante when this will occur, which creates incentives to update information by delaying irreversible entry. By assuming that the construction of a new productive plant takes some time and is unobservable in the meantime, while operation in the market is not, we show that entry rates increase or decrease under certain conditions related to the rate at which flow profits decrease as more firms enter the industry. © 2009 Blackwell Publishing Ltd and The University of Manchester.
U2 - https://doi.org/10.1111/j.1467-9957.2009.02113.x
DO - https://doi.org/10.1111/j.1467-9957.2009.02113.x
M3 - Article
SN - 1463-6786
VL - 77
SP - 594
EP - 610
JO - Manchester School
JF - Manchester School
ER -