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An agent-based model of product competition: network structure and coexistence under different information regimes

Author

Listed:
  • Giovanni Pegoretti
  • Francesco Rentocchini
  • Giuseppe Vittucci Marzetti

Abstract

The paper analyzes how the structure of interaction networks affects the diffusion patterns and market shares of different products in case of local network externalities and imperfect information. The diffusion of the different products/technologies in the market is modelled as the result of two (only partly) interrelated dynamics: i) the interaction between idiosyncratic individual thresholds and local network externalities; ii) the diffusion of the information about the product (via broadcast diffusion and word-of-mouth). The average clustering coefficient affects the overall outcome and the actual possibility that one product corners the market. Moreover, in case of small-world networks, despite the high clustering coefficient which increases the probability of an outcome with coexistence, the increase in the speed of diffusion impinges on the actual realization of such an outcome in case of sequential entry of the different technologies and/or imperfect information.

Suggested Citation

  • Giovanni Pegoretti & Francesco Rentocchini & Giuseppe Vittucci Marzetti, 2009. "An agent-based model of product competition: network structure and coexistence under different information regimes," Openloc Working Papers 0916, Public policies and local development.
  • Handle: RePEc:trn:utwpol:0916
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    File URL: http://www.openloc.eu/cms/storage/openloc/working_papers/2009/PegorettiRentocchiniVittucci2009.pdf
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    References listed on IDEAS

    as
    1. López-Pintado, Dunia, 2008. "Diffusion in complex social networks," Games and Economic Behavior, Elsevier, vol. 62(2), pages 573-590, March.
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    More about this item

    Keywords

    Agent-based model; innovation di usion; network e ects; social networks; small-world;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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