Strategic Product Innovations and Dynamic Pricing Models in Oligopolistic Market

Product innovations are one of the most critical driving forces for business developments and competitive advantages. However, commercialization of innovations ana a proper pricing strategy for the innovative products is needed to pursue the market value as well as the premium profits. A firm's pricing decision is regarded as one of the most business challenges in a competitive market, especially in dual competition and oligopolistic market. Although previous studies have addressed the tactics of price competition with diverse models, there is a need for systematic analyses regarding the dynamic price competition and a firm's strategic decision for innovative products. In this paper, System Dynamics (SD) methodology was adopted to propose a simulation-based Strategy Dynamics Pricing Model (SDPM) as a decision support system. Through iterative computer simulations, the impact of product innovations and the dynamic price competition in oligopolistic market could be systematically analyzed. Strategic pricing decisions for product innovations and market competition would be enhanced with the analysis for better innovation management.