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4th European Phd Complexity School

Information feedback mechanism and market dominance in a percolation model of eco-innovation diffusion

author: Simona Cantono, University of Torino

Description

New technologies often enter the market at a competitive disadvantage. While they may seem to promise future advantages such as lower costs, environmental friendliness, or higher performance, initially they may be significantly more expensive than incumbent technologies or face teething problems. The adoption of a new technology may also be affected by consumers’ uncertainty on its performance. In such an environment, information feedbacks are likely to arise and could allow a certain technology to be the dominant one in the market. Drawing on recent percolation models of diffusion that combine the contagion aspect of agents distributed on a network, with the heterogeneity of agent characteristics, we develop a complex-dynamics model of new technology diffusion. By using a multinomial decision mechanism to model each adopter’s choice on a portfolio of new available technologies we show the effect of information feedbacks on market dominance. Using agent-based simulations we explore when a limited subsidy policy, combined with a power-law learning curve for the price as a function of the cumulative number of adopters, can trigger a self-sustained diffusion of a certain technology.

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Slides
0:00 Information feedback mechanism and market dominance in a percolation model of innovation diffusion.
0:39 Empirical findings
1:35 Theoretical findings
2:00 Models of the diffusion of stand-alone technologies
3:45 Models of multiple technologies diffusion
5:43 Diffusion Policy
7:53 The Model
9:13 The rules of the model
9:57 The definition of neighbourhood
10:36 Equations of the model
12:46 The wheel mechanism
15:54 Set of parameters
17:56 Diffusion versus price
19:20 Equations of the model
19:26 Diffusion versus price
19:48 Diffusion over time
20:38 Learning economies
21:12 Diffusion versus alpha
22:16 Policy Implications
23:38 Diffusion versus s
25:21 Preliminary Conclusions
26:52 Further Research
28:19 - Questions

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