Compartmental market models in the digital economy—extension of the Bass model to complex economic systems

Compartmental models are widely used in epidemiology, engineering, and physics to describe the temporal behavior of complex systems. This paper how compartmental models may be applied to the digital economy—more specifically, how the Bass model can be extended to more economics systems such as markets with customer churning, competition, multisided platforms, and online games. It is demonstrated that it straightforward to establish the equations describing the various economic systems under study, however, the equations are often too complex to solved analytically in the general case. Though the paper presents simple and idealized cases, the solutions may, nevertheless, uncover important aspects that otherwise may be hidden by complexity in the general case, for example, the reasons for slow initial market growth. The paper discusses how the developed models may be used to evaluate digital economic market evolution and business policy