Estimating critical mass in the global cellular telephony market

Michal Grajek and Tobias Kretschmer

ESMT Research Working Papers from ESMT European School of Management and Technology

Abstract: Critical Mass is a common feature of technology diffusion processes. We develop a structural model of demand with network effects to provide a rigorous definition of critical mass as a function of installed base, price and network effects. Using data from the digital cellular telephony market, we identify critical mass phenomena and find that differences in the critical mass point in different countries rest mainly on different countries’ socioeconomic characteristics and the extent of competition in a country. This application illustrates that our demand model can be operationalized easily and can generate theoretically grounded empirical insights about critical mass phenomena.

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)
Pages: 44 pages
Date: 2008-06-13, Revised 2010-04-15
New Economics Papers: this item is included in nep-net
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Citations: View citations in EconPapers (4)

Published in International Journal of Industrial Organization 30(6): 496–507.

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Persistent link: https://EconPapers.repec.org/RePEc:esm:wpaper:esmt-08-004

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