Innovation diffusion of network goods determines direct network externalities that exhibit delayed full benefits, depressing sales for long periods. We model a multiplicative dynamic market potential driven by a latent heterogeneous individual threshold derived from a basic economic theory by Economides and Himmelberg (1995) which is embedded in a special Cellular Automata representation. The corresponding mean field approximation of its aggregate version is a Riccati equation with a closed form solution. This allows the detection of a change-point time separating an incubation period from a subsequent take-off due to a sufficient critical mass acting as a collective threshold. Weighted nonlinear least squares methodology is the main inferential technique. An application is analysed with reference to USA fax machine diffusion.
Cellular Automata with Network Incubation in Information Technology Diffusion
GUSEO, RENATO;GUIDOLIN, MARIANGELA
2009
Abstract
Innovation diffusion of network goods determines direct network externalities that exhibit delayed full benefits, depressing sales for long periods. We model a multiplicative dynamic market potential driven by a latent heterogeneous individual threshold derived from a basic economic theory by Economides and Himmelberg (1995) which is embedded in a special Cellular Automata representation. The corresponding mean field approximation of its aggregate version is a Riccati equation with a closed form solution. This allows the detection of a change-point time separating an incubation period from a subsequent take-off due to a sufficient critical mass acting as a collective threshold. Weighted nonlinear least squares methodology is the main inferential technique. An application is analysed with reference to USA fax machine diffusion.
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