Assessment of the Market Development Trajectory for Optimal Timing of Technological Innovation

Krasovskii, A.A. ORCID: https://orcid.org/0000-0003-0940-9366, Tarasyev, A.M., & Watanabe, C. (2008). Assessment of the Market Development Trajectory for Optimal Timing of Technological Innovation. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-08-007

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Abstract

A dynamic model of investment process for a technology innovator in a market environment is designed. The model is focused on three interrelated decision making problems for an innovator: (1) identification of the econometric trends and calibration of the model parameters; (2) optimization of the commercialization time; (3) optimal control design of the investment policy. A stochastic model based on different types of probabilistic distribution for description of the price formation mechanism is realized in the part of identification of technological trajectories of the market. It has been proven that the extremum of the profit function coincide with the points of intersection of two functions, one of which is the market distribution function that describes the market price formation mechanism and the other is the marginal costs of the project of technology innovation. The model is calibrated basing on the econometric data analysis for the CANON firm provided by the Tokyo Institute of Technology and realized in the illustrative software.

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