Institutional Affiliation: SUNY Buffalo
NBER Working Papers and Publications
|November 1978||A Model of Diffusion In the Production of an Innovation|
with Michael Gort: w0297
This paper is an attempt to explain diffusion in the production of an innovation. Diffusion in production is defined as the increase in number of producers, or net entry, in the market for a new product. It is to be distinguished from the more familiar problem in the literature on technical change, namely, the diffusion among producers in the use of new products and, hence, of changes in production processes for "old" products (or services). The empirical results confirm that a simple model -- simple in terms of number of variables -- is sufficient to explain most of diffusion in the production of an innovation. The principal variable that explains diffusion of entry is the demonstration effect. The principal variable that retards entry is the accumulated experience and goodwill of existin...
Published: Gort, Michael and Akira Konakayama. "A Model of Diffusion in the Productionof an Innovation." The American Economic Review, Vol. 72, No. 5 (December 1982), pp. 1111-1124.