A Percolation Model Of Eco-Innovation Diffusion: The Relationship Between Diffusion, Learning Economies And Subsidies

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An obstacle to the widespread adoption of environmentally friendly energy technologies such as stationary and mobile fuel cells is their high upfront costs. While much lower prices seem to be attainable in the future due to learning curve cost reductions that increase rapidly with the scale of diffusion of the technology, there is a chicken and egg problem, even when some consumers may be willing to pay more for green technologies. Drawing on recent percolation models of diffusion by Solomon et al., Frenken et al. and H?hnisch et al., the authors develop a network model of new technology diffusion that combines contagion among consumers with heterogeneity of agent characteristics.