Publication: Riding successive product diffusion waves : building a tsunami via upgrade-rebate programs
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2011-11
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Abstract
We discuss how trade-in rebates can be used to manage product multigenerational innovation
diffusion waves, and study the optimal behavior of the firm controlling the prices and rebates
associated to product upgrades. We show how this strategy accelerates the diffusion and can lead
to profit increments of about 5%. The strategy is profitable even when the rebate subsidizes the
upgrades entirely.
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New product diffusion, Successive generations, Trade-in, Upgrades, Optimal strategies