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Instability and network effects in innovative markets

Authors: Sgrignoli, Paolo; AGLIARI, ELENA; Burioni, Raffaella; Schianchi, Augusto;

Instability and network effects in innovative markets

Abstract

We consider a network of interacting agents and we model the process of choice on the adoption of a given innovative product by means of statistical-mechanics tools. The modelization allows us to focus on the effects of direct interactions among agents in establishing the success or failure of the product itself. Mimicking real systems, the whole population is divided into two sub-communities called, respectively, Innovators and Followers, where the former are assumed to display more influence power. We study in detail and via numerical simulations on a random graph two different scenarios: no-feedback interaction, where innovators are cohesive and not sensitively affected by the remaining population, and feedback interaction, where the influence of followers on innovators is non negligible. The outcomes are markedly different: in the former case, which corresponds to the creation of a niche in the market, Innovators are able to drive and polarize the whole market. In the latter case the behavior of the market cannot be definitely predicted and become unstable. In both cases we highlight the emergence of collective phenomena and we show how the final outcome, in terms of the number of buyers, is affected by the concentration of innovators and by the interaction strengths among agents.

20 pages, 6 figures. 7th workshop on "Dynamic Models in Economics and Finance" - MDEF2012 (COST Action IS1104), Urbino (2012)

Country
Italy
Keywords

FOS: Computer and information sciences, Physics - Physics and Society, 330, FOS: Physical sciences, Physics and Society (physics.soc-ph), Collective phenomena, Theoretical Computer Science, FOS: Economics and business, Random network, innovators, agent-based, Numerical Analysi, Innovation diffusion, Social and Information Networks (cs.SI), Innovator, Innovation diffusion, Agent-based, Collective phenomena, Innovators, Random network, Computer Science (all), Agent-based, Computer Science - Social and Information Networks, Microeconomic theory (price theory and economic markets), collective phenomena, Applied Mathematic, random network, Modeling and Simulation, innovation diffusion, Quantitative Finance - General Finance, General Finance (q-fin.GN), Social networks; opinion dynamics, jel: jel:D85, jel: jel:O31, jel: jel:O32

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
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bronze