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The Diffusion of Internet: A Cross-Country Analysis

  • Cuberes, David
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    This paper analyzes the process of Internet diffusion across the world using a panel of 199 countries during the time interval 1990-2004. We group countries in two categories, low and high income countries, and show that the Internet diffusion process is well characterized by an S-shape curve for both groups. Low income countries display a steeper diffusion curve and equivalent to a right shift of the high income countries diffusion curve. The estimated diffusion curves provide evidence of a “catching up” process, although a very slow one. We next explore the determinants of Internet diffusion at the country level and across the same income groups. Our most novel finding is that network effects seem to be crucial—the number of Internet users in a country at a given year is positively associated with the number of users in the previous year. We also find that the degree of competition in the provision of Internet contributes positively to its diffusion and we also identify significant positive language externalities.

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    File URL: https://mpra.ub.uni-muenchen.de/8433/1/MPRA_paper_8433.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8433.

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    Date of creation: 15 Mar 2008
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    Handle: RePEc:pra:mprapa:8433
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    1. Chinn, Menzie D. & Fairlie, Robert W., 2004. "The Determinants of the Global Digital Divide: A Cross-Country Analysis of Computer and Internet Penetration," IZA Discussion Papers 1305, Institute for the Study of Labor (IZA).
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    6. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
    7. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-53, September.
    8. Lars-Hendrik Röller & Leonard Waverman, 1996. "Telecommunications Infrastructure and Economic Development: A Simultaneous Approach," CIG Working Papers FS IV 96-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    9. Dasgupta, Susmita & Lall, Somik & Wheeler, David, 2001. "Policy reform, economic growth, and the digital divide - an econometric analysis," Policy Research Working Paper Series 2567, The World Bank.
    10. Goolsbee, Austan & Klenow, Peter J, 2002. "Evidence on Learning and Network Externalities in the Diffusion of Home Computers," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 317-43, October.
    11. Comin, D. & Hobijn, B., 2003. "Cross-Country Technology Adoption: Making the Theories Face the Facts," Working Papers 03-04, C.V. Starr Center for Applied Economics, New York University.
    12. Oecd, 2001. "Understanding the Digital Divide," OECD Digital Economy Papers 49, OECD Publishing.
    13. Estache, Antonio & Manacorda, Marco & Valletti, Tommaso M., 2002. "Telecommunication reforms, access regulation, and Internet adoption in Latin America," Policy Research Working Paper Series 2802, The World Bank.
    14. Shy,Oz, 2001. "The Economics of Network Industries," Cambridge Books, Cambridge University Press, number 9780521800952, November.
    15. Wallsten, Scott, 2005. "Regulation and Internet Use in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 53(2), pages 501-23, January.
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