Identifying critical mass in the global cellular telephony market

Michal Grajek and Tobias Kretschmer

International Journal of Industrial Organization, 2012, vol. 30, issue 6, 496-507

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.

Keywords: Critical mass; Network effects; Technology diffusion; Cellular telephony (search for similar items in EconPapers)
JEL-codes: C53 L14 M37 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:30:y:2012:i:6:p:496-507

DOI: 10.1016/j.ijindorg.2012.06.003

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