Gary Louis Lilien.

The diffusion of photovoltaics : background, modeling and initial reaction of the agricultural - irrigation sector online

. (page 5 of 5)
Online LibraryGary Louis LilienThe diffusion of photovoltaics : background, modeling and initial reaction of the agricultural - irrigation sector → online text (page 5 of 5)
Font size
QR-code for this ebook


introduced the innovation. Both models use a rate of imitation and a
rate of innovation to describe the behavior of the market. Mansfield
assumes that these coefficients are functions of relative profitability
and required initial investment. Bass, however, makes no explicit
assumptions of the underlying factors of the coefficients.

The models share many of the same limitations. Both assume that
the potential market size is predetermined and that the entire market
will eventually adopt the innovation. Neither Bass nor Mansfield
considers changes in the requirements for adoption. This can be
remedied, as pointed out earlier, by making the appropriate parameters
time dependent rather than constant. The Bass model assumes that



-90-

there is no competition to draw off buyers. While Mansfield does take
into account competition, he assumes that the profitability of
adopting the innovation is greater than alternative investments. This
seems unlikely for many new technologies where the costs have not had
the time to decrease. Mansfield points out the fact that his model
"would not be applicable to some innovations, like an entirely new
product, where, as more firms produce it, it becomes less profitable
for others to do so." There may not be a sufficient amount of data
for calibration of the parameters since the models deal with innovation
which, in general, generate only sparse data.

It seems clear that these models, despite their shortcomings,
are good for tracing the rate at which an innovation is adopted, retro-
spectively, but are not as useful to project the growth rate of
an innovation, or to analyze controls on that growth rate, before
introduction.

A significant modification of Bass' model is provided by Robinson
and Lakhani [21] who modify Bass' coefficient of imitation (q) to be
dependent on price and assume price declines with a learning or
experience curve. They then show that a dynamic pricing policy can
produce significantly greater manufacturers' profits than a policy
which equates marginal revenues with marginal costs each year. That
dynamic policy is also shown to accelerate the innovation.

A. 6 Conjectures

Two conjectures which are currently being explored are:
Conjecture 1 ; A policy that allocates demonstration projects evenly
across geographic areas can always be improved if the potentials,



-91-



imitation rates and innovation rates of those areas differ. An

optimal policy will be a policy of geographic concentration, then

expansion.

Conjecture 2 : A policy that allocates demonstration projects evenly

across economic sectors (residential, agricultural, etc.) can be

improved as in conjecture 1 by concentration in a single sector. An

optimal policy will concentrate in a sector, and then expand.

By optimal in the above conjectures we mean that given demonstra-
tion resources do the most to accelerate the diffusion of the innovation.

Determination of the conditions under which these conjectures
hold is the subject of current work.



Date Due




DEC 71984

OEC 1 6 M5



DEC 3 1 198!i



•M 16



OCT 91936

f EB 3 1987
A PR 24 199C



i
JIAy 3 o w

' jUN 2

MAR 19







MAR









H028.M414 no.963- 77

Rhoades Richa/A correlation of R&O la

734821 A*BKS O00b.48^i



3 TOflO 001 Obfl M33



H028.M414 no.964- 77

Lorange. Peter /An analytical scheme fo

745177 0«BK,S CHJ'428 76



3 TOAD 002 124 003



HD28M414 no.966- 78

Reinhard. Nico/Missing values in a rel

745179 . D*BrsS 00142218



3 1060 002 112 TA2



HD28.M414 no.971- 78

Katz, Harry Ch/Municipal labor relatio

735250 D«BKS 000.57500.



3 TOflO 001 100 525






"



^






HD28.M414 no.973- 78

Lilien. Gary L/The diffusion of photov

735249 D«BKS 00057501

Iiii Mi ill



3 TOflO 001 100 541



HD28.M414 no.974- 78
Lilien, Gary L/ADVISOR 1 :

745181 D*BKS, QQ142877

I I I I I I I I II



3 ^OflO 002 124 021





1 2 3 5

Online LibraryGary Louis LilienThe diffusion of photovoltaics : background, modeling and initial reaction of the agricultural - irrigation sector → online text (page 5 of 5)