Price setting and rapid technology adoption: : The case of the pc industry

• Autores: Adam Copeland, Adam Hale Shapiro
• Localización: The Review of economics and statistics, ISSN 0034-6535, Vol. 98, Nº 3, 2016, págs. 601-616
• Idioma: inglés
• DOI: 10.1162/rest_a_00539
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• Resumen

  • We examine how the confluence of competition and upstream innovation influences downstream firms' profit-maximizing strategies. We focus on personal computers and use two novel data sets to describe the dramatic fall in both price (27% at an annual rate) and sales of a computer over its product cycle. Further, we document that computers are typically sold for only four months before being replaced by a higher-quality product. To explain these facts, we develop and calibrate a vintage capital model that combines a competitive market structure with an exogenous rapid rate of innovation