Eirik Gaard Kristiansen
Working Paper 1998/7. 24 p. ISSN 0801-2504. ISBN 82-7553-129-2.
Anticipation of technological progress may induce potential buyers to delay adoption of a new product. We analyse how buyers' waiting options can alter firms' innovation strategies. It is shown that the firms' choice of innovation strategies relies on the possibility of selling products before they are invented or developed (ie pre-development contracts). In the absence of pre-development contracts, firms may speed up the development of new products or they may choose safer innovation strategies. Inefficiency in buyers' buy/wait decisions may have adverse effects on firms' innovation strategies.