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A Percolation-Based Model Explaining Delayed Take-Off in New-Product Diffusion

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  • Hohnisch, Martin
  • Pittnauer, Sabine
  • Stauffer, Dietrich

Abstract

A model of new-product diffusion is proposed in which a site-percolation dynamics represents socially-driven diffusion of knowledge about the product's characteristics in a population of potential buyers. A consumer buys the new product if her valuation of it is not below the price of the product announced by the firm in a given period. Our model attributes the empirical finding of a delayed ``take-off'' of a new product to a drift of the percolation dynamics from a non-percolating regime to a percolating regime. This drift is caused by learning-effects lowering the price of the product, or by network-effects increasing its valuation by consumers, with an increasing number of buyers.

Suggested Citation

  • Hohnisch, Martin & Pittnauer, Sabine & Stauffer, Dietrich, 2006. "A Percolation-Based Model Explaining Delayed Take-Off in New-Product Diffusion," Bonn Econ Discussion Papers 9/2006, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:92006
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    References listed on IDEAS

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    Cited by:

    1. Simona Cantono & Gerald Silverberg, 2008. "A percolation model of eco-innovation diffusion: the relationship between diffusion, learning economies and subsidies," MERIT Working Papers 2008-025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Alessandro Caiani, 2017. "Innovation Dynamics and Industry Structure Under Different Technological Spaces," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(3), pages 307-341, November.

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    More about this item

    Keywords

    new-product diffusion; innovation adoption; spatial stochastic processes; percolation;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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