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

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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.

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Authors and Affiliations

  1. Department of Economics, University of Trento, via Inama 5, 38122, Trento, Italy

    Giovanni Pegoretti & Francesco Rentocchini

  2. Institute of Innovation and Knowledge Management (INGENIO), Polytechnic University of Valencia (UPV) - Spanish Council for Scientific Research (CSIC), Camino de Vera s/n., 46022, Valencia, Spain

    Francesco Rentocchini

  3. Department of Sociology and Social Research, University of Milano-Bicocca, Via Bicocca degli Arcimboldi 8, 20126, Milan, Italy

    Giuseppe Vittucci Marzetti

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  1. Giovanni Pegoretti
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  2. Francesco Rentocchini
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  3. Giuseppe Vittucci Marzetti
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Correspondence to Francesco Rentocchini.

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Pegoretti, G., Rentocchini, F. & Vittucci Marzetti, G. An agent-based model of innovation diffusion: network structure and coexistence under different information regimes. J Econ Interact Coord 7, 145–165 (2012). https://doi.org/10.1007/s11403-012-0087-4

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  • DOI: https://doi.org/10.1007/s11403-012-0087-4

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