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Abstract:
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We extend the existing set of cross-country interaction studies in two ways. First, we develop several competing and complementary mixing models that capture interaction dynamics among countries. Specifically, we develop mixing models of cross-country interaction that take into account bilateral flow of people (tourism), goods (trade), capital (investments), and spatial proximity. Second, our study applies a reference leader-follower hierarchical structure on countries as a source of cross-country influence independent of the traditional word-of-mouth effect. We use Hierarchical Bayesian techniques to estimate the parameters in our proposed modifications of the Bass Diffusion Model and compare their predictive accuracies. Our data covers 7 new product diffusions across 31 countries. The sample accounts for about 80% of the global economic output and 60% of the global population.
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