Proximity in consumer network and company new products decisions

Abstract

This paper examines the effects of proximity in the consumer network structure on the diffusion of firms' new products. We find that the average path length of network on new products diffusion is unrelated to consumer preferences. The average path length of consumer network decreases the efficiency of new product diffusion. But under the similar preferences of consumers, the trend of changes of consumers network average degrees and network rewiring probability are the same as the new products diffusion efficiency, and the results will be opposite under the differentiation preferences of consumers.