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The Art of Defining, Pricing, and Marketing Advanced Multidimensional Products that Spill Technology

Chapter
Part of the Economics of Science, Technology and Innovation book series (ESTI, volume 34)

Abstract

Advanced engineering products such as aircraft distinguish themselves by a number of characteristics. Most obvious is that they are complicated as products to develop and manufactured under very complicated circumstances. They have also been designed to be robust, safe, and capable of operating under extremely demanding conditions, and to still have a very long life. This means that the purchase price of the product is only a part of the total user cost over its life cycle. The value of these products to the user furthermore, is larger, the more cost-efficient repair and maintenance features that have been built into them, and the easier they are to service and modernize. Hence, the value of the product to the user should be based on the user value and the cost of the user services it delivers over its long life cycle. Producers of such advanced products have also begun to follow the logic of this characterization, changing the property rights characteristics of their product; they increasingly own it and sell their services; hence, minimizing lifetime cost for the same use of the product and maximizing their net income of the product by postponing some of the charges to later stages of product life, and the aftermarket of servicing and updating the product.

Keywords

Venture Capital Tacit Knowledge Public Procurement Technological Spillover Aircraft Industry 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Department of Industrial EconomicsRoyal Institute of Technology (KTH)StockholmSweden

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