| By: |
Frenken, Koen (Urban & Regional research centre Utrecht (URU), Utrecht University);
Silverberg, Gerald (UNU-MERIT, and IIASA);
Valente, Marco (Department of Economics, University of L’Aquila) |
| Abstract: |
The product lifecycle model can be understood as a three-stage model of
technological development associated with a particular product technology. In
the explorative stage many different designs are developed, in the development
stage products become standardized into a dominant design, and in the mature
stage only incremental changes occur within the dominant design. Although the
product lifecycle model is widely accepted and often applied in empirical
research, innovation scholars have failed to develop systematic theoretical
models that explain the different stages of technological development along
the lifecycle. In this study, an attempt is made to contribute to product
lifecycle theory by developing a theoretical model based on percolation
dynamics. The model combines the concept of increasing returns to adoption
with information diffusion among consumers within social networks. The main
contribution of the model is that it replicates the three stages of the
product lifecycle as an outcome of a single elementary process. The model also
replicates the S-shaped diffusion curve and the occurrence of an industry
shakeout. |
| Keywords: |
mathematical models, percolation model, diffusion, social networks, product lifecycle, dominant design |
| JEL: |
C15 L11 L15 O14 O33 |
| Date: |
2008 |
| URL: |
http://d.repec.org/n?u=RePEc:dgr:unumer:2008073&r=mkt |