The Unintended Consequences of Imitation? Unpacking How an Imitative Product Harms or Improves the Performance of an Original
BIM Job Seminar - This article examines how imitative products affect the performance of the original products when the imitative product references the original product. Specifically, we suggest that the release of an imitative product triggers two countervailing forces: on one hand, the release of an imitative product increases awareness of the original product and thus might increase the demand for that original product (discovery effect); on the other hand, the imitative product might represent a competitive substitute of the original product, decreasing demand for the original product (substitution effect). We argue that while the release of both vertically and horizontally differentiated imitations leads to the discovery of original products, these two types of imitations defer in terms of their substitution effect, and the translation of the discovery effect into demand. When the imitative product is vertically differentiated from the original product, the substitution effect dominates over the discovery the effect leading to a decline in the demand of the original When the imitative product is horizontally differentiated, the substitution effect is weaker and the discovery effect translates into increasing demand for the original product. Using a rich dataset covering weekly page visits and demand of 3D printable products between 2015 and 2016, we employ a matched-sample difference-in-differences design and find support for our hypotheses. We also conduct auxiliary analyses to establish credence in the proposed mechanisms.