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Cannibalization occurs when a firm's sales of one product (or at one location) diminishes its sales of another of its products (or at another of its locations). This may occur if a newer version of the firm's product, say a video game console, is launched while an earlier version is still selling and might, in fact, still be selling well. Under what circumstances should a firm consider that the benefits of cannibalization outweigh the risks?
Explanation:
This would have been simply a timing of entry question were it not a bit more complicated. Should a firm actually supersede their own product? Why would the firm even consider doing that? Do they really have to?
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