Moduleco 1. - Simulation of markets, social networks and population dynamics 1.2. Two part tariff and diffusion with consumption externality : monopoly case

The basic-version of this model is a strictly neo-classical monopoly with two part tariff and consumption externality, following Littlechild (1975). Consumers have variable willingness to pay, according to an idiosyncratic parameter, distributed on [0,1] and with an externality effect from their neighbourhood. In this simulation, neighbourhood is a local one (VonNeuman).

At the first step innovative consumers form rational expectations (full information) about their neighbourhoud, given their  idiosyncratic parameter, and choose to adopt only if this adoption is an attempt to provoke a sufficient level of adoption in their neighbourhood. In cognitive versions (under development) both consumers and monopolist learn some unknown parameters through experimentation.

A full competition model is more extensively presented in annex 1.     

The customers are "blue" people. red people doesn't adopt. Yellow people are just becoming member of the "club"

A is the fixed part, p the price of one unit of the usage epsilon is the price elasticity for the usage

Denis.Phan@enst-bretagne.fr ;   Antoine Beugnard@enst-bretagne.fr