Percolation-Based Model of New-Product Diffusion with Macroscopic Feedback Effects
This paper proposes a percolation-based model of new-product diffusion in the spirit of Solomon et al. (2000) and Goldenberg et al. (2000). A consumer buys the new product if she has formed her individual valuation of the product (reservation price) and if this valuation is greater or equal than the price of the product announced by the firm in a given period. Our model differs from previous percolation-based models of new-product diffusion in two respects. First, we consider macroscopic feedback effects affecting the supply or the demand side of the market (or both). Second, a consumer who did not buy the product in the period in which her valuation was formed remains a potential buyer and buys in some later period if and when her individual valuation equals or exceeds the price of the product. Unlike most previous models of new-product diffusion, our framework accounts for the empirical finding of long tails characteristic for early stages of innovation diffusion.
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.:
- Blinder, Alan S, 1991.
"Why Are Prices Sticky? Preliminary Results from an Interview Study,"
American Economic Review,
American Economic Association, vol. 81(2), pages 89-96, May.
- Alan S. Blinder, 1991. "Why are Prices Sticky? Preliminary Results from an Interview Study," NBER Working Papers 3646, National Bureau of Economic Research, Inc.
- Goldenberg, J & Libai, B & Solomon, S & Jan, N & Stauffer, D, 2000. "Marketing percolation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 284(1), pages 335-347.
- Katz, Michael L & Shapiro, Carl, 1992. "Product Introduction with Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 55-83, March.
- Stanley C. Hollander & Kathleen M. Rassuli (ed.), 1993. "Marketing," Books, Edward Elgar Publishing, volume 0, number 512.
- Solomon, Sorin & Weisbuch, Gerard & de Arcangelis, Lucilla & Jan, Naeem & Stauffer, Dietrich, 2000. "Social percolation models," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 277(1), pages 239-247.
When requesting a correction, please mention this item's handle: RePEc:arx:papers:cond-mat/0308358. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (arXiv administrators)
If references are entirely missing, you can add them using this form.