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Title:A Percolation-Based Model Explaining Delayed Take-Off in New-Product Diffusion PDF Logo
Authors:Hohnisch, Martin
Pittnauer, Sabine
Stauffer, Dietrich
Issue Date:2006
Series/Report no.:Bonn econ discussion papers 2006,9
Abstract:A model of new-product diffusion is proposed in which a site-percolation dynamics represents socially-driven diffusion of knowledge about the product?s characteristics in a population of potential buyers. A consumer buys the new product if her valuation of it is not below the price of the product announced by the firm in a given period. Our model attributes the empirical finding of a delayed ?take-off? of a new product to a drift of the percolation dynamics from a non-percolating regime to a percolating regime. This drift is caused by learning-effects lowering the price of the product, or by network-effects increasing its valuation by consumers, with an increasing number of buyers.
Subjects:new-product diffusion
innovation adoption
spatial stochastic processes
percolation
JEL:L15
C15
O33
Document Type:Working Paper
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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