Forecasting the international diffusion of innovations: An adaptive estimation approach

Yvonne van Everdingen and Wouter Aghina

ERIM Report Series Research in Management from Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam

Abstract: We introduce an international, adaptive diffusion model that can be used to forecast the cross-national diffusion of an innovation at early stages of the diffusion curve. We model the mutual influence between the diffusion processes in the different social systems (countries) by mixing behaviour. Furthermore, we apply the matching procedure as proposed by Dekimpe, Parker and Sarvary (1998). This international diffusion model is adaptively estimated using an augmented Kalman Filter with Continuous States and Discrete observations, developed by Xie, Song, Sirbu and Wang (1997). This is the first application of this procedure in an international context. We empirically applied this method to the diffusion of Internet access at home, and mobile telephony among households in the 15 countries of the European Union. The results show that our international, adaptive model performs well and is by far superior when compared to the classical method of estimating diffusion models for each country separately.

Keywords: bayesian estimation; cross-country diffusion; forecasting; international marketing (search for similar items in EconPapers)
JEL-codes: C44 M M31 O31 O57 (search for similar items in EconPapers)
Date: 2003-01-01
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