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| Author: | Zhao, H. Jagpal, S. |
| Title: | The effect of secondhand markets on the firm's dynamic pricing and new product introduction strategies |
| Journal: | International Journal of Research in Marketing
2006 : VOL. 23:3, p.295-307 |
| Index terms: | pricing new products strategy externalities innovation |
| Freeterms: | secondhand markets |
| Language: | eng |
| Abstract: | This paper examines the effect of secondhand markets for durable goods on the firm's dynamic pricing and new product introduction strategies. The model differs from previous new product studies since it simultaneously considers several factors: secondhand markets, industry-specific differences, different pricing strategies, and demand externalities. Furthermore, the model allows nonbuyers from the past to remain in the market in the future. The main managerial results are twofold. Contrary to intuition, secondhand markets can actually increase the firm's profitability. In addition, secondhand markets will have differential defects on pricing across industries depending on the magnitude of the innovation and whether demand externalities are present. |
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