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Peer effects in product adoption

Author

Listed:
  • Theresa Kuchler

    (NYU Stern School of Business)

  • Arlene Wong

    (Princeton University)

  • Johannes Stroebel

    (New York University)

Abstract

To what extend do friendship links affect the adoption of new products? We first combine social network data with individual choices on the adoption of the newly introduced Google Pixel phone to estimate the effects of friends’ adoption of a new product on individual purchasing decisions. We use the exclusive introduction of the Pixel by Verizon combined with differences in Verizon market share across the US to instrument for friends’ initial adoption of the phone. Next, we analyze the role of county level connections on the adoption of a wide variety of products in stores across US counties. Counties that are more connected socially adopt new products at similar times. We explore whether consumers in more socially connected counties have access to a more new products and a wider variety of products and the implications of such consumption externalities on consumer welfare.

Suggested Citation

  • Theresa Kuchler & Arlene Wong & Johannes Stroebel, 2018. "Peer effects in product adoption," 2018 Meeting Papers 1001, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:1001
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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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