Modeling Generational Transitions from Aggregate Data

Abstract

Using only aggregate sales data, the model we propose decomposes the diffusion processes of the respective technological generations and tests if different technological generations have different diffusion parameters. It also estimates the location of the generational transition from the old to the new technology. We develop a routine to test whether the maturation point of the old generation occurs before or after the transition to a new technological generation. Finally, we show that, when the aggregate sales data are generated by multiple technological generations, our model does better in forecasting than a single-regime Bass model.diffusion modeling;regime-switching models;technological generations