An analysis of new product diffusion process

This paper clarifies the diffusion mechanism of new product, which is needed under social considerations, from the viewpoints of technological advances (TA), market and public subsidy policies. First, a linear model is constructed and analyzed to grasp a trend of the diffusion process, taking into account pricing for new product and effects of TA on production and market. Next, economic effects of subsidy policies are discussed on the pricing and technical development, and some important viewpoints are presented. Finally, this model is extended to the case where there is a potential demand peculiar to the new product and the difference in pricing between the original and extended models is examined.