Market switching strategy in a stochastic business environment: from an early market to a mature market

ABSTRACT In the present paper, by making use of optimal stopping theory, we construct a stochastic dynamic model to derive the optimal market switching strategy. Main results of this paper are: the producer should switch the market while the profits in the early market are high if (1) gulf between the early market and the mature market is not deep, (2) market as a whole is not uncertain or (3) product is vulnerable to other producers’ introductions of new products.