A percolation model of the product lifecycle
Koen Frenken, Gerald Silverberg & Marco Valente
#2008-073
The product lifecycle model can be understood as a three-stage model of
technological development associated with a particular product
technology. In the explorative stage many different designs are
developed, in the development stage products become standardized into a
dominant design, and in the mature stage only incremental changes occur
within the dominant design. Although the product lifecycle model is
widely accepted and often applied in empirical research, innovation
scholars have failed to develop systematic theoretical models that
explain the different stages of technological development along the
lifecycle. In this study, an attempt is made to contribute to product
lifecycle theory by developing a theoretical model based on percolation
dynamics. The model combines the concept of increasing returns to
adoption with information diffusion among consumers within social
networks. The main contribution of the model is that it replicates the
three stages of the product lifecycle as an outcome of a single
elementary process. The model also replicates the S-shaped diffusion
curve and the occurrence of an industry shakeout.
Keywords: Percolation, diffusion, social networks, product lifecycle,
dominant design
JEL classification code: C15, L11, L15, O14, O33
UNU-MERIT Working Papers
ISSN 1871-9872