The diffusion of mobile telephony in Italy and the UK: an empirical investigation

Since its appearance mobile telephony has shown a remarkably fast diffusion pattern in most advanced countries. This paper investigates technological and economic factors that have influenced the diffusion process of cellular phones, in particular the diffusion speed and the upper limit. The epidemic model widely used in diffusion studies is summarised and discussed highlighting the evolutionary disequilibrium nature of diffusion processes. Moreover, the econometric specification of some of the models distinguishes between long-run relationships and short-run adjustments to a continuously evolving pattern. We find that the new digital technology, which coincides with increased competition in both Italy and the UK, has made the process faster and increased the saturation level in Italy, but not in the UK; in Italy only the decreasing price of the handset has affected the diffusion process, whereas we find that, in addition to that, decreasing tariffs and increasing consumption expenditures have been significant in shaping the diffusion process of mobile telephony in the UK.