Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/22954 
Year of Publication: 
2006
Series/Report no.: 
Bonn Econ Discussion Papers No. 9/2006
Publisher: 
University of Bonn, Bonn Graduate School of Economics (BGSE), Bonn
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

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