The impact of private information leakage on innovative product introduction

Increasingly industrial competition and rationality of customers purchase behavior force firm to need to continuously innovate to ensure long-term competitiveness. However, innovative product introduction is very risky, this require firms to cooperate for research and development (R&D). Firm may leak directly or indirectly to supplier ever competitors. We study that incumbent´s private demand forecast information and core component development knowledge via supplier to entrant. We find that when incumbent demand forecast information is leaked to entrant, entrant ability to evaluating demand information impact incumbent decision only when proportion of price of entrant to incumbent lower than some threshold. That is, entrant sell price is lower, it´s more beneficial for incumbent; On the other hand, when incumbent core component development knowledge is leaked to entrant, entrant ability to parsing development knowledge influence incumbent decision only when proportion of entrant cost to incumbent cost higher than some threshold, furthermore, incumbent profits decrease in this cost ratio when this ratio higher than some threshold. Finally, we also find leakage of these two types of information have opposite impact on incumbent.