WHY THE BASS MODEL FITS WITHOUT DECISION VARIABLES

Over a large number of new products and technological innovations, the Bass diffusion model (Bass 1969) describes the empirical adoption cur ve quite well. In this study, we generalize the Bass model to include decision variables such as price and advertising. The generalized mode l reduces to the Bass model as a special case and explains why the Bas s model works so well without including decision variables. We compare our generalized Bass model to other approaches from the literature fo r including decision variables into diffusion models, and our results provide both theoretical and empirical support for the generalized Bas s model. We also show how our generalized Bass model can be used for p roduct planning purposes.