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Second‐Mover Advantages with Asymmetric Costs and Information Updates: A Product Life Cycle Perspective
Author(s) -
Zhu Wenge,
Xu Xiaohui Eva
Publication year - 2011
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1552
Subject(s) - first mover advantage , stackelberg competition , perspective (graphical) , position (finance) , product (mathematics) , product lifecycle , economics , microeconomics , industrial organization , new product development , computer science , mathematics , management , artificial intelligence , geometry , finance
Two firms with asymmetric costs engage in a Stackelberg game under multiple levels of uncertainty with information updating. A product life cycle perspective is employed to reveal when and why a second‐mover may have an advantage. At early stages in the product life cycle, when uncertainty is the dominating factor, the impact of uncertainty may be either positive or negative. As a result, the Stackelberg leader faces the possibility of either overshooting or losing its market leadership position to the second‐mover. In later market stages, when cost is more important, a process‐innovating second‐mover may accrue higher profits. Copyright © 2011 John Wiley & Sons, Ltd.