Boundary Effects in the Diffusion of New Products on Cartesian Networks

Abstract

The Role of Boundaries in the Spreading of Solar Peer effects by neighbors play a key role in the spreading of residential solar. Thus, people are more likely to install a solar system on their roof if some of their neighbors have already done so. Because people who live near the municipality boundary have fewer neighbors, does this imply that they are less likely to adopt solar? In “Boundary Effects in the Diffusion of New Products on Cartesian Networks,” Fibich, Levin, and Gillingham analyze this problem analytically using the Bass model on two-dimensional networks and empirically using data on installations of solar systems. They show that boundaries have a significant impact on the adoption of residential units near the municipality boundary. Their effect on the aggregate adoption in the municipality, however, is negligible.