Lecture E4 - Morecroft (2015, Ch. 6), Dynamics of Growth and Diffusion (2020-03-24)

This lecture covers content from Chapter 6 of Morecroft (2016) on models for the dynamics of growth and diffusion, with a major focus on the Bass model (with advertising) and its conceptual relationship to the SIR model of infectious disease dynamics from the previous lecture. We start with a way to re-conceptualize a simple model of growth in a fishery toward something that looks more like an S-I model (the first "half" of an SIR model) and use that to motivate the Bass model. We discuss the modeling of advertising in the Bass model (related to spontaneous infections of a population) and different ways to expand the Bass model to be more specific to different problems of interest (such as durable goods, goods with repeat purchases, etc.). We close with a real-world example of a modified Bass model being used for scenario planning of a low-cost airline being introduced into an existing market.