Modeling Competitive Diffusion Process in Japanese ADSL Service Market

This study models innovation diffusion process with brand-level competition, focusing on the competition among ADSL service providers in Japan. For a particular brand (service provider), the diffusion process is assumed to be influenced by three forces: (1) the external influence through mass media, (2) the internal influence of the communication with the brand adopters, and (3) the influence due to the market growth of the product category. Through the assumption that the internal influence of each brand in a product category has the identical structure, the proposed brand-level model can be summed up to the Bass model of the product category, and solved with a closed-form expression. Applying the model to the diffusion of ADSL market in Japan, the empirical results reveal that the proposed model describes the brand-level diffusion patterns very well.