Identifying critical mass in the global cellular telephony market
AbstractTechnology 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 InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 30 (2012)
Issue (Month): 6 ()
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Web page: http://www.elsevier.com/locate/inca/505551
Critical mass; Network effects; Technology diffusion; Cellular telephony;
Find related papers by JEL classification:
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
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