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New Model Introductions, Cannibalization and Market Stealing: Evidence from Shopbot Data
Author(s) -
Haynes Michelle,
Thompson Steve,
Wright Peter W.
Publication year - 2014
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12024
Subject(s) - cannibalization , nested logit , economics , market definition , market share , panel data , econometrics , logit , elasticity (physics) , market structure , industrial organization , microeconomics , materials science , finance , composite material
Incremental innovation plays an important role in competitive conduct in high‐tech industries. This paper explores the impact of new model introduction by employing a nested logit specification to investigate the determination of market shares across and within submarkets for a panel of 336 digital cameras. Our results confirm the existence of pronounced life cycle effects and the existence of statistically significant market stealing and cannibalization effects, particularly associated with the introduction of a technologically superior entrant into the model's market segment. The paper reveals significant differences in market outcomes, in both elasticity and response to entry, across submarkets.