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Investigation of the effect of secondary market on the diffusion of innovation

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  • Cho, Youngsang
  • Koo, Yoonmo

Abstract

In the high-tech product market, the number of hungry adopters, a new type of early adopters who buy new products and sell them soon in the on- or off-line secondary market to seek for the other new products, has been increasing due to the short product life cycle of high-tech products and the low transaction cost on the Internet. This new phenomenon means that it is inappropriate to consider customers only in the primary market as total adopters in innovation diffusion modeling, since purchasers in the secondary market also have a word-of-mouth effect on the remaining non-adopters. To explain this new phenomenon, we modify the basic Bass diffusion model by incorporating the effect of the secondary market and conduct an empirical analysis. As a result, we conclude that the basic Bass model is likely to overestimate sales volume and tends to forecast lagged peak time when there is an effect from the secondary market. This means that applying a diffusion model to high-tech products without considering the secondary market effect would provide an inaccurate market forecast.

Suggested Citation

  • Cho, Youngsang & Koo, Yoonmo, 2012. "Investigation of the effect of secondary market on the diffusion of innovation," Technological Forecasting and Social Change, Elsevier, vol. 79(7), pages 1362-1371.
    • Handle: RePEc:eee:tefoso:v:79:y:2012:i:7:p:1362-1371
    DOI: 10.1016/j.techfore.2012.04.002
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    Citations

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    Cited by:

    1. Ozgur Dedehayir & Roland J. Ortt & Carla Riverola & Francesc Miralles, 2017. "Innovators And Early Adopters In The Diffusion Of Innovations: A Literature Review," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 21(08), pages 1-27, December.
    2. Huh, Sung-Yoon & Lee, Chul-Yong, 2014. "Diffusion of renewable energy technologies in South Korea on incorporating their competitive interrelationships," Energy Policy, Elsevier, vol. 69(C), pages 248-257.
    3. Garlet, Taís Bisognin & Ribeiro, José Luis Duarte & de Souza Savian, Fernando & Mairesse Siluk, Julio Cezar, 2019. "Paths and barriers to the diffusion of distributed generation of photovoltaic energy in southern Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 111(C), pages 157-169.
    4. Feng, Lipan & Zheng, Xiong & Govindan, Kannan & Xue, Kelei, 2019. "Does the presence of secondary market platform really hurt the firm?," International Journal of Production Economics, Elsevier, vol. 213(C), pages 55-68.
    5. Neokosmidis, Ioannis & Avaritsiotis, Nikolaos & Ventoura, Zoe & Varoutas, Dimitris, 2015. "Assessment of the gap and (non-)Internet users evolution based on population biology dynamics," Telecommunications Policy, Elsevier, vol. 39(1), pages 14-37.
    6. Felipe Moraes do Nascimento & Julio Cezar Mairesse Siluk & Fernando de Souza Savian & Taís Bisognin Garlet & José Renes Pinheiro & Carlos Ramos, 2020. "Factors for Measuring Photovoltaic Adoption from the Perspective of Operators," Sustainability, MDPI, vol. 12(8), pages 1-29, April.

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