publication . Report . 2017

Vaporware in a quality differentiation model with preannouncement

Li, Na; Van Cayseele, Patrick;
Open Access
  • Published: 01 Jan 2017
  • Country: Belgium
Abstract
Preannouncements allow computer producers to coordinate their product strategies, in particular the quality choices. This coordination results in vaporware. We develop an extended duopoly model with preannouncements followed by a two-stage quality-price choice game. The results show that preannouncements help symmetric firms achieve asymmetric coordination, and improves the equilibrium payoffs. In addition, software products are distinguished from hardware products, modeled as information goods with negligible marginal cost and a large development cost. Welfare analysis shows that consumer surplus typically decreases following preannouncements by hardware produc...
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Report . 2017
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