I would like to thank the Editor and two referees, whose comments helped greatly in the revision of the paper. I would also like to thank Kalyan Chatterjee, Vijay Krishna, Edward Green, Neil Wallace and Marco Ottaviani for helpful comments and suggestions.
Waterfall Versus Sprinkler Product Launch Strategy: Influencing the Herd†
Article first published online: 24 MAR 2013
© 2013 Blackwell Publishing Ltd and the Editorial Board of The Journal of Industrial Economics
The Journal of Industrial Economics
Volume 61, Issue 1, pages 138–165, March 2013
How to Cite
Bhalla, M. (2013), Waterfall Versus Sprinkler Product Launch Strategy: Influencing the Herd. The Journal of Industrial Economics, 61: 138–165. doi: 10.1111/joie.12013
- Issue published online: 24 MAR 2013
- Article first published online: 24 MAR 2013
A seller decides the price and sequence in which a product of unknown value is introduced to consumers. Consumers inspect the product before consumption and observe past prices and sales. Consumption at a high price is informative for later consumers as it indicates that the product is likely to be of high value. I show that on an average prices decrease over time. However, expected revenue on an average rises over time. For a high enough discount factor, I find that for extreme beliefs the firm introduces the product to all consumers but for intermediate values the product is introduced only to one consumer.