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Keywords:

  • Information Update;
  • Second-Mover Advantage;
  • Stackelberg Game;
  • Asymmetric Costs

Two firms with asymmetric costs engage in a Stackelberg game under multiple levels of uncertainty with information updating. A product life cycle perspective is employed to reveal when and why a second-mover may have an advantage. At early stages in the product life cycle, when uncertainty is the dominating factor, the impact of uncertainty may be either positive or negative. As a result, the Stackelberg leader faces the possibility of either overshooting or losing its market leadership position to the second-mover. In later market stages, when cost is more important, a process-innovating second-mover may accrue higher profits. Copyright © 2011 John Wiley & Sons, Ltd.