An agent-based model of product competition: network structure and coexistence under different information regimes

Abstract

The paper analyzes how the structure of interaction networks affects the diffusion patterns and market shares of different products in case of local network externalities and imperfect information. The diffusion of the different products/technologies in the market is modelled as the result of two (only partly) interrelated dynamics: i) the interaction between idiosyncratic individual thresholds and local network externalities; ii) the diffusion of the information about the product (via broadcast diffusion and word-of-mouth). The average clustering coefficient affects the overall outcome and the actual possibility that one product corners the market. Moreover, in case of small-world networks, despite the high clustering coefficient which increases the probability of an outcome with coexistence, the increase in the speed of diffusion impinges on the actual realization of such an outcome in case of sequential entry of the different technologies and/or imperfect information.Agent-based model, innovation diusion, network eects,social networks, small-world