To Commit or Not to Commit in Product-Innovation Timing Games

This research analyzes a firm’s timing of bringing a new product to the market, based on a product-innovation timing game in which the quality of a new product increases over time . We explore the equilibrium outcomes when both firms can precommit to their timing of market entry (the so-called precommitment game), when they cannot credibly precommit to their timing of market entry (the so-called preemption game), and when only one firm can precommit to its timing of market entry (the so-called mixed precommitment game). We finally discuss an extended timing game with endogenous precommitment choices. The results show that sequential entry is the unique equilibrium outcome in all the precommitment game, preemption game, and mixed precommitment game. When firms’ commitment decisions are made endogenously, both firms choose to commit to their respective timing of market entry in equilibrium