A Percolation Model of the Product Lifecycle
AbstractThe product lifecycle model can be understood as a three-stage model of technological development associated with a particular product technology. In the explorative stage many different designs are developed, in the development stage products become standardized into a dominant design, and in the mature stage only incremental changes occur within the dominant design. Although the product lifecycle model is widely accepted and often applied in empirical research, innovation scholars have failed to develop systematic theoretical models that explain the different stages of technological development along the lifecycle. In this study, an attempt is made to contribute to product lifecycle theory by developing a theoretical model based on percolation dynamics. The model combines the concept of increasing returns to adoption with information diffusion among consumers within social networks. The main contribution of the model is that it replicates the three stages of the product lifecycle as an outcome of a single elementary process. The model also replicates the S-shaped diffusion curve and the occurrence of an industry shakeout.
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Bibliographic InfoPaper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 08-20.
Date of creation: 2008
Date of revision:
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Web page: http://www.druid.dk/
Percolation; diffusion; social networks; product lifecycle; dominant design;
Other versions of this item:
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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