Premium
Product diffusion, product differentiation and the timing of new product introduction the television and VCR market 1964‐85
Author(s) -
Putsis Jr William P. ,
Publication year - 1989
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.4090100105
Subject(s) - product differentiation , product (mathematics) , supply and demand , economics , econometrics , product proliferation , market saturation , diffusion , new product development , microeconomics , mathematics , product management , market share analysis , market microstructure , physics , geometry , management , finance , cournot competition , order (exchange) , thermodynamics
An econometric model of the demand and supply of color televisions, black and white televisions and video cassette recorders in the United States from 1964 to 1985 is developed and estimated. Supply and demand parameter estimates are obtained using a simultaneous equation system estimated by three‐stage least squares. The model employed integrates theories of product diffusion from the marketing literature with those of the economic literature on discrete choice. Particular attention is paid to the relationship between product saturation and demand, as well as to supply decisions pertaining to product differentiation and the timing of new product introduction. The central hypothesis that product differentiation and new product introduction are more likely to occur as demands for established products slow at critical saturation levels is supported by the empirical results and actual market occurrences.