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New telecommunications services : Network externalities and critical mass


  • Allen, David


Network externalities -- the requirement that there be a group of subscribers if communications are to occur -- play a central role in the demand for new networks. And as telecommunications evolve, new networks have increasingly taken attention. In an effort to describe the demand for new networks, this paper investigates the critical mass phenomena that characterize network externalities. The experience to date with the Minitel information service in France serves as an informal empirical check on conclusions. With this base, the paper then draws implications for the domain appropriate to regulation and for universal service pricing under liberalization. It concludes with a speculation about the role of mixed economy, illustrated by the construction of Japanese universal service.

Suggested Citation

  • Allen, David, 1988. "New telecommunications services : Network externalities and critical mass," Telecommunications Policy, Elsevier, vol. 12(3), pages 257-271, September.
  • Handle: RePEc:eee:telpol:v:12:y:1988:i:3:p:257-271

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    Cited by:

    1. Nicolas Curien & Kenza Oubejja, 1999. "Réseaux multiservices : équilibres et dynamique," Annals of Economics and Statistics, GENES, issue 53, pages 213-228.
    2. Mayntz, Renate, 1990. "The Influence of Natural Science Theories on Contemporary Social Science," MPIfG Discussion Paper 90/7, Max Planck Institute for the Study of Societies.
    3. Chien-Wen Chen, 2015. "The Effect of Technological and Psychological Factors on Users' Intentions to Continually Read e-Books," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 14(2), pages 195-220, December.
    4. Sirkka L. Jarvenpaa & Dorothy E. Leidner, 1998. "An Information Company in Mexico: Extending the Resource-Based View of the Firm to a Developing Country Context," Information Systems Research, INFORMS, vol. 9(4), pages 342-361, December.
    5. Lepoutre, Jan & Oguntoye, Augustina, 2018. "The (non-)emergence of mobile money systems in Sub-Saharan Africa: A comparative multilevel perspective of Kenya and Nigeria," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 262-275.
    6. Rainer Alt, 2020. "Evolution and perspectives of electronic markets," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(1), pages 1-13, March.
    7. Barman, Hemanta & Dutta, Mrinal Kanti & Nath, Hiranya K., 2018. "The telecommunications divide among Indian states," Telecommunications Policy, Elsevier, vol. 42(7), pages 530-551.
    8. Scaglione, Miriam & Giovannetti, Emanuele & Hamoudia, Mohsen, 2015. "The diffusion of mobile social networking: Exploring adoption externalities in four G7 countries," International Journal of Forecasting, Elsevier, vol. 31(4), pages 1159-1170.
    9. Sangin Park, 2004. "Strategic Maneuvering and Standardization: Critical Advantage or Critical Mass?," Econometric Society 2004 Far Eastern Meetings 596, Econometric Society.
    10. Zhang, Marina Y. & Dodgson, Mark, 2007. ""A roasted duck can still fly away": A case study of technology, nationality, culture and the rapid and early internationalization of the firm," Journal of World Business, Elsevier, vol. 42(3), pages 336-349, September.
    11. Kim, Moon-Soo & Kim, Ho, 2007. "Is there early take-off phenomenon in diffusion of IP-based telecommunications services?," Omega, Elsevier, vol. 35(6), pages 727-739, December.
    12. Goldenberg, Jacob & Libai, Barak & Muller, Eitan, 2010. "The chilling effects of network externalities," International Journal of Research in Marketing, Elsevier, vol. 27(1), pages 4-15.
    13. Guo, Jie & Bouwman, Harry, 2016. "An analytical framework for an m-payment ecosystem: A merchants׳ perspective," Telecommunications Policy, Elsevier, vol. 40(2), pages 147-167.
    14. Casey, Thomas R. & Töyli, Juuso, 2012. "Mobile voice diffusion and service competition: A system dynamic analysis of regulatory policy," Telecommunications Policy, Elsevier, vol. 36(3), pages 162-174.
    15. Lim, Byeong-Lak & Choi, Munkee & Park, Myeong-Cheol, 2003. "The late take-off phenomenon in the diffusion of telecommunication services: network effect and the critical mass," Information Economics and Policy, Elsevier, vol. 15(4), pages 537-557, December.

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