2003/08/18 by Martin Hohnisch, Hohnisch, Martin, Sabine Pittnauer +3
Business, Management and Accounting · Decision Sciences · Economics, Econometrics and Finance · Physics and Astronomy · #Digital Platforms and Economics #FOS: Economics and business #FOS: Physical sciences #Firm Innovation and Growth #General Finance (q-fin.GN) #Innovation Diffusion and Forecasting #Statistical Mechanics (cond-mat.stat-mech) #cond-mat.stat-mech #q-fin.GN
paper · pdf · doi:10.48550/arxiv.cond-mat/0308358
Econophysics, 11 pages including figures
arxiv created 2003/08/18 · openalex publication_date 2003/08/18 · arxiv updated 2009/12/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
This paper proposes a percolation-based model of new-product diffusion in the spirit of Solomon et al. (2000) and Goldenberg et al. (2000). A consumer buys the new product if she has formed her individual valuation of the product (reservation price) and if this valuation is greater or equal than the price of the product announced by the firm in a given period. Our model differs from previous percolation-based models of new-product diffusion in two respects. First, we consider macroscopic feedback effects affecting the supply or the demand side of the market (or both). Second, a consumer who did not buy the product in the period in which her valuation was formed remains a potential buyer and buys in some later period if and when her individual valuation equals or exceeds the price of the product. Unlike most previous models of new-product diffusion, our framework accounts for the empirical finding of long tails characteristic for early stages of innovation diffusion.