The paper analyzes how the structure of social networks affects innovation diffusion and competition under different information regimes. Diffusion is modeled as the result of idiosyncratic adoption thresholds, local network effects and information diffusion (broadcasting and demonstration effect from previous adopters). A high social cohesion decreases the probability of one innovation cornering the market. Nonetheless, with imperfect information, in small-world networks the higher speed of diffusion produced by the low average distance increases this probability. A low social cohesion also increases the probability of falling into traps of under-adoption. However, such probability is significantly lower with imperfect information, because such regime is characterized by higher levels of market concentrations and this reduces the frictions due to the coexistence of non-compatible product innovations.

An agent-based model of innovation diffusion : network structure and coexistence under different information regimes / G. Pegoretti, F. Rentocchini, G. Vittucci Marzetti. - In: JOURNAL OF ECONOMIC INTERACTION AND COORDINATION. - ISSN 1860-711X. - 7:2(2012 Oct), pp. 145-165. [10.1007/s11403-012-0087-4]

An agent-based model of innovation diffusion : network structure and coexistence under different information regimes

F. Rentocchini
Secondo
;
2012

Abstract

The paper analyzes how the structure of social networks affects innovation diffusion and competition under different information regimes. Diffusion is modeled as the result of idiosyncratic adoption thresholds, local network effects and information diffusion (broadcasting and demonstration effect from previous adopters). A high social cohesion decreases the probability of one innovation cornering the market. Nonetheless, with imperfect information, in small-world networks the higher speed of diffusion produced by the low average distance increases this probability. A low social cohesion also increases the probability of falling into traps of under-adoption. However, such probability is significantly lower with imperfect information, because such regime is characterized by higher levels of market concentrations and this reduces the frictions due to the coexistence of non-compatible product innovations.
economics and econometrics; business and international management
Settore SECS-P/02 - Politica Economica
Settore SECS-P/01 - Economia Politica
ott-2012
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2434/390617
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