Journal on Policy & Complex Systems Volume 1, Number 2, Fall 2014 | Page 114

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within the system . Limitations in these existing models were identified while exploring the SO ethanol fuel options . For example , sales of the Prius were used to calibrate the model developed by Keith . The ubiquitous availability of gasoline infrastructure and the generally favorable perception of the Prius by consumers who purchased the vehicle limit the models applicability to technology systems where these conditions may not exist or may not be assured . The research described in this paper explores the parameters of the ethanol fuel and vehicle powertrain market by extending the system boundaries and utilizing and extending the existing models and techniques to include unfavorable word-of-mouth ( WOM ) effects and the downstream consumer fuel choice between SO and regular fuel for those consumers who have SO capable vehicles . The perception of consumers using a technology creates WOM through the interaction of the technology owners with other people they come in contact with . WOM and marketing are the principle mechanisms for technology growth ( Sterman , 2000 ). The research explores the feedback effect that the formation of unfavorable views has on both total ethanol consumption and in forming technology perception for technology adopters and potential adopters . This approach moves beyond the prevalent concept of “ tipping points ” in-which positive support through policy , mandates , and regulations ultimately leads to a self-sustaining growth ( Greene , Park , & Liu , 2014 ). The tipping point is predicated solely on a virtuous cycle with an assumption of consumer utility , and ignores the potential for vicious cycles and balancing effects to occur within the system . Energy policy based on tipping point theory assumes the right policy will move the market from line 3 to line 1 in Figure 1 and does not consider the possibility that even with policy complex stakeholder interactions can lead to market collapse or stagnation ( see Figure 1 , Line 2 & Line 3 ) as occurred with compressed natural gas vehicle markets .
Limited scenarios are tested in order to provide initial insights , validate the concepts embedded in the model design , and demonstrate that the basic concept of unidirectional market growth and tipping points is inadequate for energy policy modeling . The model was exercised by scenario testing to explore the effects of SO adoption relative to the unfavorable WOM . Although this model is applied to an ethanol fuel-vehicle system , the model can be extended to other systems in which consumer choice occurs both during the purchase and use , and / or for which changes and reductions in utility post purchase can lead to unfavorable WOM .
Unfavorable Word-of-Mouth

Fundamental to the classical general

models of market diffusion and adoption developed by Bass and others is the mechanism of social contagion , which is traditionally , called WOM ( Bass , 1969 , 1980 ; Horsky , 1990 ; Kalish , 1985 ; Kamakura & Balasubramanian , 1988 ; Robinson & Lakhani , 1975 ). Existing models usually only consider positive valence of WOM which supports adoption of the given technology or product under consideration . In competitive markets with positive valence of WOM the relative market growth or dominance of a given platform can only be improved with this positive perception and corresponding social diffusion . This approach does not consider the possibility for the negative valence of WOM , which could switch the reinforcing behavior from virtuous to vicious mode .
The importance of unfavorable consumer views and WOM is illustrated by the
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