Publication Type
Journal Article
Version
acceptedVersion
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
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
Citation
GAO, Sarah Y.; LIM, Wei Shi; and TANG, Christopher.
The impact of the potential entry of copycats: Entry conditions, consumer welfare, and social welfare. (2016). Decision Sciences. 48, (4), 594-624.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5275
Copyright Owner and License
Authors
Additional URL
https://doi.org/10.1111/deci.12235
