Commitment, Entry Deterrence, and Innovation in a Durable Goods Monopoly

摘要

This paper examines the effect of entry deterrence on the timing of the monopolist's innovation pattern in a durable goods market as well as on the social welfare. By manipulating the consumers' expectation of the obsolescence date of the entrant's products, the incumbent can effectively lower the expected profit of the potential entrant and thus keep it out of the market. The rational incumbent will usually make commitment about its product releasing schedule. And this ability decreases social welfare.