Publication Type

Journal Article

Publication Date

8-2016

Abstract

This article examines the implications of the potential entry of a copycat who produces and sells a copycat (i.e., imitation) product that competes with the incumbent product. By analyzing a two-period dynamic noncooperative game between these two firms, we identify conditions under which the copycat can gain successful market entry. More importantly, we find that the potential entry of a copycat creates (implicit) pressure for the incumbent to lower its selling price; hence, it improves consumer welfare. Finally, we identify conditions under which the potential entry of a copycat can increase social welfare (i.e., consumer welfare and the profit of both firms).

Keywords

Copycat, Dynamic Pricing, Entry Strategy, Incumbent

Discipline

Management Sciences and Quantitative Methods | Marketing | Operations and Supply Chain Management | Strategic Management Policy

Research Areas

Operations Management

Publication

Decision Sciences

Volume

48

Issue

4

First Page

594

Last Page

624

ISSN

0011-7315

Identifier

10.1111/deci.12235

Publisher

Wiley: 24 months

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1111/deci.12235