Innovation Creation and Diffusion in a Social Network: An Agent Based Approach

31 Pages Posted: 14 Oct 2006

See all articles by Marco Lamieri

Marco Lamieri

Intesa SanPaolo SpA

Daniele Ietri

University of Turin

Date Written: October 2004


Market is not only the result of the behaviour of agents, as we can find other forms of contact and communication. Many of them are determined by proximity conditions in some kind of space: in this paper we pay a particular attention to relational space, that is the space determined by the relationships between individuals. The paper starts from a brief account on theoretical and empirical literature on social networks. Social networks represent people and their relationships as networks, in which individuals are nodes and the relationships between them are ties. In particular, graph theory is used in literature in order to demonstrate some properties of social networks summarised in the concept of Small Worlds. The concept may be used to explain how some phenomena involving relations among agents have effects on multiple different geographical scales, involving both the local and the global scale. The empirical section of the paper is introduced by a brief summary of simulation techniques in social science and economics as a way to investigate complexity. The model investigates the dynamics of a population of firms (potential innovators) and consumers interacting in a space defined as a social network. Consumers are represented in the model in order to create a competitive environment pushing enterprises into innovative process (we refer to Schumpeter's definition): from interaction between consumers and firms innovation emerges as a relational good.

Keywords: Innovation, small world, computational economics, network, complexity

JEL Classification: C63, D24, O33, L10, L20

Suggested Citation

Lamieri, Marco and Ietri, Daniele, Innovation Creation and Diffusion in a Social Network: An Agent Based Approach (October 2004). Available at SSRN: or

Marco Lamieri (Contact Author)

Intesa SanPaolo SpA ( email )

Piazza S. Carlo, 156
Torino, 10121

Daniele Ietri

University of Turin ( email )

Via Po 53
Torino, Turin - Piedmont 10100

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