A Computer Simulation Model of Competing Products Diffusion on Small-World Network

Abstract

We investigate two competing products with network effects diffusion on heterogeneous Newman-Watts (HNW) network based on a computer simulation model. Consumerspsila behaviors in our model are determined not only by their individual preferences and purchasing resistances but also by their interactions with others. To analyze the determinant factors in products diffusion we divide network effects into two kinds - direct network effects and indirect network effects. The outcomes of simulations show that direct network effects act as a brake on the winner-take-all process, often lead to market sharing. Consumers in the market are cliquish and each faction adopts the same product when market sharing outcome occurs. Indirect network effects are great impetus on the winner-take-all process, but the winner-take-all process can be slowed for the heterogeneity of purchasing resistances among consumers.