Innovation diffusion with heterogeneous networked agents: a computational model
AbstractIt is well established that S-shaped curves describe the diffusion processes of many innovations quite well, but little insight on the mechanics of diffusion is achieved by simple curve fitting. We propose an evolutionary model of the diffusion process, focusing on the characteristics of economic agents and on the interactions among them, and relate those determinants with the observed shape of the diffusion curve. Using simulation techniques, we show that the proposed model is able to explain why an innovation may not diffuse globally across an economy/region, even when it faces no rival innovations. Moreover, we show how network size, informational spillovers, and the behavior of innovation prices shape the diffusion process. The results regarding network size and informational spillovers rationalize the importance of informational lock-outs, proving they can influence both the aggregate adoption rate and the speed of the diffusion process. With respect to innovation prices, simulation results show that faster price decline leads to higher aggregate adoption rates, and that the diffusion process is more sensitive to the pricing dynamics than to the network size or the behavior of spillovers. Copyright Springer-Verlag 2012
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Journal of Economic Interaction and Coordination.
Volume (Year): 7 (2012)
Issue (Month): 2 (October)
Contact details of provider:
Web page: http://www.springer.com/economics/economic+theory/journal/11403
Find related papers by JEL classification:
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Silverberg, Gerald & Dosi, Giovanni & Orsenigo, Luigi, 1988. "Innovation, Diversity and Diffusion: A Self-organisation Model," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 98(393), pages 1032-54, December.
- Stoneman, P & Ireland, N J, 1983. "The Role of Supply Factors in the Diffusion of New Process Technology," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 93(369a), pages 66-78, Supplemen.
- Ireland, N & Stoneman, P, 1986. "Technological Diffusion, Expectations and Welfare," Oxford Economic Papers, Oxford University Press, vol. 38(2), pages 283-304, July.
- Simona Cantono & Gerald Silverberg, 2008. "A percolation model of eco-innovation diffusion: the relationship between diffusion, learning economies and subsidies," MERIT Working Papers 025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
- Frank M. Bass, 1969. "A New Product Growth for Model Consumer Durables," Management Science, INFORMS, INFORMS, vol. 15(5), pages 215-227, January.
- Utterback, James M & Abernathy, William J, 1975. "A dynamic model of process and product innovation," Omega, Elsevier, Elsevier, vol. 3(6), pages 639-656, December.
- Parker, Philip M., 1994. "Aggregate diffusion forecasting models in marketing: A critical review," International Journal of Forecasting, Elsevier, Elsevier, vol. 10(2), pages 353-380, September.
- Geroski, Paul A, 1999.
"Models of Technology Diffusion,"
CEPR Discussion Papers, C.E.P.R. Discussion Papers
2146, C.E.P.R. Discussion Papers.
- Sarkar, Jayati, 1998. " Technological Diffusion: Alternative Theories and Historical Evidence," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 12(2), pages 131-76, April.
- Spiwoks, Markus & Bizer, Kilian & Hein, Oliver, 2008. "Informational cascades: A mirage?," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 67(1), pages 193-199, July.
- Davies, Stephen W., 1979. "Inter-firm diffusion of process innovations," European Economic Review, Elsevier, Elsevier, vol. 12(4), pages 299-317, October.
- Reinganum, Jennifer F., .
"On the Diffusion of New Technology: A Game Theoretic Approach,"
Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences
312, California Institute of Technology, Division of the Humanities and Social Sciences.
- Reinganum, Jennifer F, 1981. "On the Diffusion of New Technology: A Game Theoretic Approach," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 48(3), pages 395-405, July.
- Christoph H. Loch & Bernardo A. Huberman, 1999. "A Punctuated-Equilibrium Model of Technology Diffusion," Management Science, INFORMS, INFORMS, vol. 45(2), pages 160-177, February.
- Cainarca, Gian Carlo & Colombo, Massimo G. & Mariotti, Sergio, 1989. "An evolutionary pattern of innovation diffusion. The case of flexible automation," Research Policy, Elsevier, Elsevier, vol. 18(2), pages 59-86, April.
- Deroian, Frederic, 2002. "Formation of social networks and diffusion of innovations," Research Policy, Elsevier, Elsevier, vol. 31(5), pages 835-846, July.
- Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992.
"A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades,"
Journal of Political Economy, University of Chicago Press,
University of Chicago Press, vol. 100(5), pages 992-1026, October.
- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
- Gold, Bela, 1981. "Technological Diffusion in Industry: Research Needs and Shortcomings," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 29(3), pages 247-69, March.
- Lim, Byeong-Lak & Choi, Munkee & Park, Myeong-Cheol, 2003. "The late take-off phenomenon in the diffusion of telecommunication services: network effect and the critical mass," Information Economics and Policy, Elsevier, Elsevier, vol. 15(4), pages 537-557, December.
- Balcer, Yves & Lippman, Steven A., 1984. "Technological expectations and adoption of improved technology," Journal of Economic Theory, Elsevier, Elsevier, vol. 34(2), pages 292-318, December.
- Peter N. Golder & Gerard J. Tellis, 2004. "Growing, Growing, Gone: Cascades, Diffusion, and Turning Points in the Product Life Cycle," Marketing Science, INFORMS, INFORMS, vol. 23(2), pages 207-218, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.