Optimal Pricing of Successive Generations of Product Advances

We obtain the optimal pricing policy of a monopolist marketing successive generations of product advances. We characterize the impact of managerial foresight regarding entry of the second generation product and technological substitution created due to the introduction of the second generation product on the optimal pricing policy of the monopolist._x000B_ We also obtain the optimal pricing policies of the producers in situations where the successive generations of product advances are marketed by independent producers. By contrasting these policies with those of the monopolist marketing successive generations of product advances, we provide insight on the differential impact of managerial foresight and technological substitution on the optimal pricing policies of the producers._x000B_