Technological Innovation Strategy Of The Firm Considering Network Externality

Technology competition and investment are common in emerging industries.Based on the high cost of new technology and the increasing demand of consumers,this paper studies the investment strategy of the supplier,the technical innovation and production strategy of the manufacturer,and the pricing strategy of the innovative product from the perspective of network externality.The core content is divided into three parts.The first part is the research on technology innovation strategy of competitive manufacturers.Based on the theory of individual rationality and incentive compatibility,Hotelling model is used to establish a duopoly manufacturer competition model to analyze whether competitive manufacturers should carry out technological innovation.It is found that when the network externality of manufacturer 2 is small,that is,the difference between the two enterprises is large,both enterprises will choose technological innovation.When the figure is moderate,the strategy choice of the two manufacturers is different and there is no pure strategy.When the figure is small,both enterprises do not carry out technological innovation.The second part discusses the investment strategy of supply chain's innovation technology.Considering network externality and market preference,a manufacturer production model is established to study the investment decisions of suppliers and manufacturers.It is found that manufacturers' equilibrium strategy is mainly affected by technology market share and they will choose technology with higher market share;however,when the network externality and market loss rate are both small or the network externality is large,the moderate market share will promote the differentiation of manufacturers' strategic choices.Besides,if a supplier invests in only one technology,the expected profit of the manufacturer increases first and then decreases with the network externality,which may be related to the intensity of competition.When the network externality is small,i)if the investment cost is low,the supplier invests in both technologies;ii)if the cost is moderate,the supplier invests in only one technology;iii)if the cost is high,the supplier invests in neither technology.The third part focuses on the product pricing strategy of vertical stock ownership of suppliers.Based on the shareholding ratio,the supplier shareholding model is constructed,and then the manufacturer pricing model is constructed by considering different market structures to discuss the pricing of innovative products.The results show that the optimal retail price of manufacturer held by supplier is the highest when it is leader,and secondly when the competitor is leader.The optimal price of manufacturer not held by supplier is affected by both the shareholding ratio and the market structure;however,there is no obvious relationship between network externality and retail price.When the proportion of shareholding is large,the manufacturer held by supplier has the "first mover advantage" and the "backward advantage" when the proportion of shareholding is small,and the "backward advantage" of the manufacturer not held by supplier is irrelevant to the shareholding ratio;The supply chain's profit increase firstly and then decrease with the shareholding ratio,and social welfare positively correlated with the ratio.