Performance Effects of Imitative Entry

Question 1

Definition horizontally differentiated

Answer 1

Differ based on preference

Question 2

Definition vertically differentiated

Answer 2

Differ in quality

Question 3

Horizontally differentiated products are more advantageous for…?

Answer 3

FM, since their advantages are more durable in this case

Question 4

Vertically differentiated products are more advantageous for…?

Answer 4

Imitators, since If the imitator’s products are costly for the innovator to imitate, then there is incentive for existing customers to switch to the imitator’s product.

Question 5

How can early mover disadvantages be caused?

Answer 5

free riding, shifts in technology, shifts in customer needs, and incumbent inertia (not progressing when necessary).

Question 6

Which kinds of goods have a higher uncertainty, causing customers to stay with the first product that is adequate enough?

Answer 6

Experience goods

Question 7

When does something lead to a horizontally differentiated product and when to a vertically differentiated product?

Answer 7

Greater uncertainty about the innovators product leads most of the time to a horizontally differentiated product, while low uncertainty leads to a vertically differentiated product.