The pattern and externality effect of diffusion of mobile telecommunications: the case of the OECD and Taiwan

Through the adoption of a two-step methodology, this paper sets out to examine the pattern of diffusion of mobile telecommunications with the aim of identifying the key factors influencing the diffusion rate for 29 OECD countries and Taiwan between 1980 and 2001. We find that the pattern of diffusion of mobile telecommunications for all the sample countries is generally characterized by an S-shaped curve; nevertheless, significant differences exist in the spread of the S curve, largely due to differences in the magnitude of the network externality coefficient. Our results underline the importance, with regard to accelerating diffusion, of the switch to digital technology and market competition. Furthermore, the approach selected with regard to fee payment represents another critical factor affecting mobile telecommunications diffusion, while the fixed penetration rate has a significantly negative influence. Policy implications stemming from these results are also discussed.