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Has the Internet accelerated the diffusion of new products?

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  • Prince, Jeffrey T.
  • Simon, Daniel H.

Abstract

In this paper we measure the effect of Internet adoption on consumers' propensity to adopt a wide range of diffusing products. To do this, we utilize a rich panel of household surveys on purchases of relatively new technology products. Our results indicate that the Internet accelerates product diffusion, but with varying magnitude. In an attempt to determine the mechanisms underlying this effect, we find direct evidence that the Internet does not increase product awareness. However, we find suggestive evidence that the Internet increases adoption rates both through access to increased information about new products (via online research) and through online shopping. We also find that the magnitude of the Internet's effect is strongly tied to diffusion rates, and especially familiarity rates. This finding is consistent with Internet access having the greatest impact on the adoption of products with more developed marketing strategies (i.e., more developed information sources and online markets). Our findings indicate that the Internet helps bolster demand for products early in their diffusion process, and they suggest that improved access to information and the convenience of online shopping are likely the primary drivers of this effect. Consequently, to the extent that accelerated diffusion of new products is (on net) desirable, our findings may provide a further argument toward social promotion of Internet adoption.

Suggested Citation

  • Prince, Jeffrey T. & Simon, Daniel H., 2009. "Has the Internet accelerated the diffusion of new products?," Research Policy, Elsevier, vol. 38(8), pages 1269-1277, October.
  • Handle: RePEc:eee:respol:v:38:y:2009:i:8:p:1269-1277
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    References listed on IDEAS

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    Cited by:

    1. Beck, Jonathan, 2008. "Diderot´s rule," Discussion Papers, Research Unit: Competition and Innovation SP II 2008-13, Social Science Research Center Berlin (WZB).
    2. Christoph Safferling & Aaron Lowen, 2011. "Economics in the Kingdom of Loathing: Analysis of Virtual Market Data," Working Paper Series of the Department of Economics, University of Konstanz 2011-30, Department of Economics, University of Konstanz.
    3. Marco Cioppi, 2013. "The role of web communication to enhance the value of retail trade in small cities," The International Journal of Economic Behavior - IJEB, Faculty of Business and Administration, University of Bucharest, vol. 3(1), pages 127-145, December.
    4. Pérez-Hernández, Javier & Sánchez-Mangas, Rocío, 2011. "To have or not to have Internet at home: Implications for online shopping," Information Economics and Policy, Elsevier, vol. 23(3), pages 213-226.

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