OPTIMAL PRODUCT RELEASE TIME FOR A NEW HIGH-TECH STARTUP FIRM UNDER TECHNICAL UNCERTAINTY

Abstract

Decision makers of new high-tech startup firms always want to choose an optimal time to launch their products which are under research and development (R&D) to obtain the maximum net income of these firms. However, existing models fail to consider the optimal release time of products for these new high-tech startup firms. In this paper, the optimal time to launch the product of the R&D project is assumed to be the first time when the product of the R&D project is released to the market. Based on this assumption, we develop a continuous-time model to find the optimal time at which the startup firm launches its product of the R&D project by considering the price of the similar product. Employing the methods of dynamic programming and variational inequalities, we also provide a closed form solution to our model. We also find that these high-tech startup firms prefer to delay their product release time when the price of the similar product is at a phase of rapid growth or the price has considerable uncertainty. Moreover, some numerical examples are provided to investigate the properties of our model.