The Pace of Intermediate-Product Introductions

Managerial and Decision Economics, 2005

Rajeev K. Tyagi and Jagmohan S. Raju

Abstract

This paper models frequency of introductions of newer generations of an intermediate-product sold by an upstream "developer" firm to downstream manufacturer firms. The manufacturers use the intermediate product to manufacture final products, and are heterogeneous in the time it takes them to develop and introduce final products based on the latest generation of the intermediate product. This downstream heterogeneity could arise, for example, from heterogeneity in manufacturers' technical skills or existing patent regimes. Among other results, we show that the optimal frequency of introduction of the intermediate-product can increase or decrease in the extent of this downstream heterogeneity.

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