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The Diffusion of Cellular Telephony in Portugal before UMTS: A Time Series Approach

Pedro Pereira and José Pernías-Cerrillo ()
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José Pernías-Cerrillo: Universitat Jaume I, Castellón

No 8, Working Papers from Portuguese Competition Authority

Abstract: In this paper, we propose a methodology to estimate diffusion processes that differs from the standard practice in two ways. First, we model the nonlinear long-run trend through the Richards curve, which is more flexible than the standard alternatives. Second, we propose a dynamic specification that accounts for: short-run dynamics, and a tendency to correct deviations from the nonlinear long-run trend. We apply the model to the diffusion of cellular telephony in Portugal. Statistical tests show that our model outperforms the standard diffusion models. We also use the model to characterize the diffusion process of the Portuguese cellular telephone industry, and test several hypothesis about the recent evolution of the industry.

Date: 2005-03
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