To Launch or Not to Launch: An Economic Analysis of Delayed Product Introduction

This study investigates the incentive of a monopolist to delay the introduction of a newly improved version of its product in a three-period model incorporating the extent of quality improvement, product durability, and discount rate as exogenous variables. We consider the firm´s decisions in two settings: one where upgrade pricing is feasible and the other is not. Our theoretical results show that in both settings, a low quality difference between the sequential versions or a low discount rate may dissuade the firm from launching the new version in an early period. Especially, the shrinking of product durability is identified as an important factor that induces the firm to delay the selling of the new version. The conditions favoring delayed introduction become more and more stringent as product durability increases.