Innovation and Imitation Strategies in the Age of the Upgrade – An Agent-Based Simulation Model

🗓️ Event	10th European Meeting on Applied Evolutionary Economics
📅 Date	31 May 2017
📍 Location	Strasbourg, France
🌐 Language	English
📥 Materials	Slides (PDF)
📄 Working Paper	Download

Product life-cycles in markets for innovative products are shortening, consumers rapidly upgrade from one product generation to the next and demand constant technical improvement. Firms are racing against each other and the consumers’ rising expectations. This study uses an agent-based simulation model to analyze the dynamics of innovation and imitation strategies in this new type of market from the firm perspective. Firms use pure and mixed strategies to achieve maximum profitability over the life-cycle of a market for a new product category. It is found that strategies involving innovation outperform those that rely only on imitation, even in absence of any protective measures like patenting or branding.

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