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Identifying critical mass in the global cellular telephony market

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  • Grajek, Michał
  • Kretschmer, Tobias

Abstract

Technology diffusion processes are often said to have critical mass phenomena. We apply a model of demand with installed base effects to provide theoretically grounded empirical insights about critical mass. Our model allows us to rigorously identify and quantify critical mass as a function of installed base and price. Using data from the digital cellular telephony market, which is commonly assumed to have installed base effects, we apply our model and find that installed base effects were generally not strong enough to generate critical mass phenomena, except in the first cellular markets to introduce the technology.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 30 (2012)
Issue (Month): 6 ()
Pages: 496-507

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Handle: RePEc:eee:indorg:v:30:y:2012:i:6:p:496-507

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Web page: http://www.elsevier.com/locate/inca/505551

Related research

Keywords: Critical mass; Network effects; Technology diffusion; Cellular telephony;

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Cited by:
  1. Nina Czernich, 2011. "The emergence of broadband internet and consequences for economic and social development," ifo Beiträge zur Wirtschaftsforschung, Ifo Institute for Economic Research at the University of Munich, number 37, March.

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