DOI: 10.1257/mic.20240293 ISSN: 1945-7669
Competing Diffusions in a Social Network
Arthur Campbell, C. Matthew Leister, Philip Ushchev, Yves ZenouWe develop a model of competing diffusions of goods on a social network. There are two types of goods and individuals: mass-market and niche-market. There is a unique stable steady state, and the adoption of a mass-market good is greater than its population share. Greater connectivity and homophily will concurrently increase the prevalence of niche-market goods. If there is a strategic agent who wants to promote a niche good, she will invest more in influencing activities than one promoting mass-market goods. When individuals choose their degree of homophily, niche-market individuals exhibit greater homophily than mass-market ones. (JEL D83, D85, L86, Z13)