MODEL ENTRY AND EXIT IN A DIFFERENTIATED-PRODUCT INDUSTRY - THE PERSONAL-COMPUTER MARKET

Entry and exit literature focuses almost exclusively on firm-level dec isions, leaving out an important aspect of firm behavior: whether to i ntroduce new models while the firm produces similar goods, and where t o locate them in the existing product space, taking into account own m odels and the possibility of new entry. This paper analyzes model entr y and exit decisions in the case of the personal computer market. Diff erences in new model spatial location between incumbents and entrants are found, while both model overpricing and firm reputation are found to be significant in the probability of model's exit estimation.