A simulation research of innovation diffusion based on network externality

Innovation diffusion is a complex and dynamical process, and the diffusion process of many products show not only positive network externality but also negative network externality which is ususlly neglected by people. Based on scale-free network and heterogeneity of consumers, this paper discusses network externality fully by using computer simulation. We find that when we take into consideration of the negative side of network externality, innovations usually cannot diffuse so fully as we usually believe. And if the negative effect emerges at a later time, there will be more final adopters in the network. What´s more, the heterogeneity of consumes plays a negative role in the diffusion process.