A Theory of Size and Product Diversity of Marketplaces with Application to the Trade Show Arena

Markets involve the exchange of information and products between buyers and sellers in marketplaces created by market organizers. This paper develops a theory to explain the differences in the size (number of participants) and diversity (range of products displayed) across these marketplaces. We assume that successful transactions require information transmission between parties calling for investment in time/effort. Two key factors affect this process of information interchange: diminishing marginal returns to effort encouraging diversification and congestion cost resulting from participant overload. We study a sequential model of interaction between buyers, sellers and marketplace organizers. Organizers choose the number and nature of marketplaces to organize, and set entry fees for them while buyers and sellers make participation and effort allocation decisions. We show that participants' breadth of product interest, their buying and selling intensities (i.e. how frequently they are likely to engage in future product transactions) as well as the technological innovativeness of the industry have important influences on the size and range of product diversity in the marketplace. We apply this model to the industrial trade show arena to explain differences in trade show types (horizontal with broad product focus vs. vertical with narrow product focus) across industries. Empirical tests of several propositions derived from our model provide an encouraging degree of support for our theory. Our analysis identifies several industries that appear to be underserved by one type of show or the other, suggesting possible future opportunities for organizers.

Models of new product diffusion : current status and research agenda

Diffusion models, mathematical attempts to describe the growth patterns of new products and relate them to variables such as price and population characteristics, have seen major development trends in the past few years. This paper reviews that progress in order to isolate those areas most likely to be fruitful for further development. The paper first reviews some of the behavioral underpinnings of diffusion models: the phenomena being modeled. Next, the major explicit form models are reviewed and classified according to whether they have market-controls or not and according to the number of stages they explicitly consider. These models are related to larger-scale simulation models (especially in the solar energy area) that use explicit-form models as building blocks. The paper concludes with a discussion of some important advances that still need to be made in this important and rapidly-growing area

The consumer response to photovoltaics: the MIT Sun Day experience

This paper reports on the results of the MIT Energy Laboratory Sun Day PV study. This study continued our assessment of likely market response to photovoltaics. The Sun Day exhibit attracted a high proportion of solar inno- vators. The study determined that the key issues relating to PV preference are - economical and ecological soundness - complexity of the system and - secondary benefits. A key result is that this population is much more receptive to PV than were populations previously studied, but we were not able to identify external characteristics associated with that innovativeness.Prepared for the U.S. Dept. of Energy under Contract no. EX-76-A-01-2295, Task order 37

The photovoltaic market analysis program : background, model development, applications and extensions

The purpose of this report is to describe and motivate the market analysis program for photovoltaics that has developed over the last several years. The main objective of the program is to develop tools and procedures to help guide government spending decisions associated with stimulating photovoltaic market penetration.The program has three main components: (1) theoretical analysis aimed at understanding qualitatively what general types of policies are likely to be most cost effective in stimuating PV market penetration; (2) operational model development (PV1), providing a user oriented tool to study quantitatively the relative effectiveness of specific government spending options and (3) field measurements, aimed at providing objective estimates of the parameters used in the diffusion model used in (2) above.Much of this report is structured around the development and use of PV1, an interactive computer model designed to determine allocation strategies for (constrained) government spending that will best accelerate private sector adoption of PV. To motivate the model's development, existing models of solar technology diffusion are reviewed, and it is shown that they a) have not used sound diffusion principles and b) are not empirically based. The structure of the PV1 model is described and shown to address these problems.Theoretical results on optimal strategies for spending federal market development and subsidy funds are then reviewed. The validity of these results is checked by comparing them with PV1 projections of penetration and cost forecasts for fifteen government policy strategies which were simulated on the PV1 model. Analyses of these forecasts indicate that photovoltaics will not diffuse significantly during the time horizon studied if government market development funds (money allocated to the purchase and installation of PV systems) are withheld. Market development spending has the most positive effect on photovoltaic diffusion in strategies where it is deployed early and concentrated in the residential and commercial sectors. Early subsidy spending had little influence on ultimate diffusion. The analyses suggest that any subsidies for PV should be delayed until photovoltaic costs drop substantially. Extensions of the model and approach to other technologies are discussed

The diffusion of photovoltaics : background, modeling, calibration and implications for government policy

Prepared for the United States Dept. of Energy under Contract no. EX-76-A-01-2295, Task order 37

Medical Innovation Revisited: Social Contagion versus Marketing Effort

This article shows that Medical Innovation—the landmark study by Coleman, Katz, and Menzel—and several subsequent studies analyzing the diffusion of the drug tetracycline have confounded social contagion with marketing effects. The article describes the medical community’s understanding of tetracycline and how the drug was marketed. This situational analysis finds no reasons to expect social contagion; instead, aggressive marketing efforts may have played an important role. The Medical Innovation data set is reanalyzed and supplemented with newly collected advertising data. When marketing efforts are controlled for, contagion effects disappear. The article underscores the importance of controlling for potential confounds when studying the role of social contagion in innovation diffusion

The diffusion of photovoltaics : background, modeling and initial reaction of the agricultural - irrigation sector

This paper deals with the background, development and calibration of a model of innovation-diffusion, designed to help allocate government field test and demonstration resources in support of a photovoltaic technology across sectors, regions and over time. The paper reviews current work in the area of diffusion and substitution models, and gives a brief review of current theory in the buyer behavior area. A model is developed, drawing upon concepts in these areas, and its computer implementation is reviewed. The measures needed to calibrate the model are performed in the agricultural-irrigation sector in conjunction with a field installation in Mead, Nebraska. The analysis of those results indicated that - only three to four demonstration projects are needed to eliminate new product risk-perception among farmers; - exposure to a working PV site makes farmers more aware of potential energy savings than does a description of the system; - key factors associated with PV are - newness/expense - complexity of the system and use of untried concepts - independence from traditional fuel sources. - exposure to the site has little effect on preference; - PV is acceptable to a wide range of farmers; - a premium would be paid for the product. Additional model developments and the potential of a model-use to support decision-making for government programs are reviewed