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

Abstract 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). Sequential entry is the unique equilibrium outcome in all three games. We finally discuss two extended timing games with endogenous commitment choices. The equilibrium involves a precommitment subgame in the endogenous precommitment game with observable delay, while mixed precommitment subgames appear to be the equilibria in undominated strategies in the endogenous precommitment game with action commitment.