Stackelberg model of low-cost innovation

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Science Research Management ›› 2011, Vol. 32 ›› Issue (9) : 44-54.

Chen Qi

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Abstract

The hypothesis on endogenous spillover of innovation and R&D and a set of measurable variable and parameter are introduced; a three-stage model of product-pricing and innovation input of low-cost product is established and analyzed by using a three stage game model. A series of conclusion that are significant to low-cost innovation is found, that is, the equilibrium position of duopoly are neither minimum differentiation coming from linear cost model nor maximum one coming from quadratic cost model, the fact extends special cases into a general conclusion; a set of functional relationship between innovation input of firms and their innovation efficiency or absorption ability as well as between product position differentiation and varies parameters are found by analogue simulation.

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low-cost innovation / R&D / design innovation / pricing / function design / innovation input / game theory / simulation

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Chen Qi. Stackelberg model of low-cost innovation[J]. Science Research Management. 2011, 32(9): 44-54

References

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