Competition and Innovation : The Diffusion of Mobile Telecommunications in Central and Eastern Europe

The paper tackles the issue of rapid diffusion of mobile telecommunications in Central and Eastern Europe. Results show that the later a country has adopted mobile telecommunications the faster is the diffusion speed. There is a convergence in adoption levels across countries at 20 per cent of the population. Competition variables are important: the speed of diffusion increases with the number of firms and simultaneous entry is more effective than sequential entry in accelerating the diffusion speed. Diffusion speed increases with the size of the fixed telecommunications network and the length of the waiting list. It is concluded that the development of mobile communications networks has significant welfare effects and a set of policy recommendations are provided