On the econometrics of the Bass diffusion model.

The parsimonious Bass diffusion model is frequently used to forecast adoptions of new products and to compare the life cycles of specific products across countries. To meet these goals, reliable parameter estimates are needed. We develop the asymptotic theory for the three key parameters in the Bass model. For this purpose, we need to make assumptions about the stochastic error process. On doing so, we arrive at an alternative version of the Bass model than the one usually considered in practice, because our model includes an additional variable and it incorporates heteroscedastic errors. The asymptotic theory entails that the parameters, on standardization by their standard ...

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