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• W3395741 abstract "This paper constructs and analyzes an economic model of repeated product innovations in which the introduction of one product forms the base from which the development of the next product will start. The innovation process depends both on the flow of R&D expenditures and on the length of time over which they accrue. The products are durable, so although products become technologically obsolete due to the introduction of new and superior products, consumers need not replace the products they already possess. We determine rational expectations equilibria under the monopoly and the duopoly regimes, and use them to interpret a vast body of empirical literature which documents the frequency of innovations of various durable goods, changes in their quality adjusted prices, and how these variables vary in a cross section of products and over time. The model shows that the decentralized market equilibria are inefficient. We also analyze the effect of various policy instruments, including output taxes or subsidies and patent limitations, which can be used to remedy the inefficiencies. • This paper was presented at several institutions where we received many useful comments. We retain responsibility for remaining errors. • This paper was completed while the first author was visiting the WZB. He thanks the WZB for their hospitality and financial support." @default.
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• W3395741 date "2008-01-01" @default.
• W3395741 modified "2023-09-27" @default.
• W3395741 title "THE FREQUENCY AND PRICING OF PRODUCT INNOVATIONS" @default.
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