Product diffusion and the demand for new food products

Abstract

AbstractThis paper extends the theory of product diffusion associated with consumer demand for new products. New food products encompass both truly new branded or value‐added products and nontraditional food and agricultural products introduced from another region or culture. Bass's new‐product diffusion theory is integrated with economic demand models to develop simple diffusion–demand models to account, simultaneously, for the diffusion process and for the traditional effects of price and income. Models are tested using widely available aggregate trade data on nontraditional fruits consumed in Indonesia, Malaysia, Singapore, France, and England. Dynamic diffusion–demand models outperform both the standard diffusion model and the static double‐log demand model—in and out of sample—and produced parameter estimates for price and income that differ from those obtained with models without a diffusion process. [Econ‐Lit citations: L660, C200, C530]. © 2002 Wiley Periodicals, Inc.