Model exit in a vertically differentiated market: Interfirm competition versus intrafirm cannibalization in the computer hard disk drive industry

What characteristics of a product’s local market make its withdrawal more likely? This study investigates
the importance of intrafirm “cannibalization” of a product’s demand by products manufactured by the same firm
versus interfirm competition from others’ products. While both forces impact product withdrawal, cannibalization
has a more robust and significant effect. Hedonic price regressions also reveal higher discounting of older models’
quality-adjusted prices, strengthening the argument for caution when treating list prices as proxies for transaction prices.

Title	Model exit in a vertically differentiated market: Interfirm competition versus intrafirm cannibalization in the computer hard disk drive industry
Creator	Ruebeck, Christopher S.
Publisher	Review of Industrial Organization
Academic Department	Economics
Division	Social Sciences
Organization	Lafayette College
Date Issued	2005
Date Available	2009-04-15T17:21:36Z
Type	Article
Language	English
Keyword	hedonic price index
	withdrawal
	exit
	variable hazard rate
	transaction prices
	differentiated products
Bibliographic Citation	Ruebeck, C. S. 2005. "Model exit in a vertically differentiated market: Interfirm competition versus intrafirm cannibalization in the computer hard disk drive industry." Review of Industrial Organization 26 (1): 27-59
Standard Identifier	Handle 10385/513
Standard Identifier	DOI 10.1007/s11151-004-6576-4
Permalink	http://hdl.handle.net/10385/513
Rights Statement	In Copyright
Rights Holders	Kluwer Academic Publishers