Investigation of the effect of secondary market on the diffusion of innovation

Youngsang Cho, Yoonmo Koo

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

In the high-tech product market, the number of hungry adopters, a new type of early adopters who buy new products and sell them soon in the on- or off-line secondary market to seek for the other new products, has been increasing due to the short product life cycle of high-tech products and the low transaction cost on the Internet. This new phenomenon means that it is inappropriate to consider customers only in the primary market as total adopters in innovation diffusion modeling, since purchasers in the secondary market also have a word-of-mouth effect on the remaining non-adopters. To explain this new phenomenon, we modify the basic Bass diffusion model by incorporating the effect of the secondary market and conduct an empirical analysis. As a result, we conclude that the basic Bass model is likely to overestimate sales volume and tends to forecast lagged peak time when there is an effect from the secondary market. This means that applying a diffusion model to high-tech products without considering the secondary market effect would provide an inaccurate market forecast.

Original languageEnglish
Pages (from-to)1362-1371
Number of pages10
JournalTechnological Forecasting and Social Change
Volume79
Issue number7
DOIs
Publication statusPublished - 2012 Sep

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Applied Psychology
  • Management of Technology and Innovation

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