Estimating Diffusion Rates for Telecommunications: Evidence from European Union

We study and evaluate the role of geographical, economic and social determinants of telecommunication services in European Union. We use a logistic model with spatial covariates to estimate the demand function for telecommunications in the Union. Our results show that different types of interconnections generate diverse rates of diffusion for country specific demand. The impact on telecommunications from countries with geographical, economic or social similarities differs based on those characteristics. Omitted variable bias from not modeling spatial interdependence is limited in models under spatial connectivity criteria. This satisfies the statistical inference drawn by previous empirical studies regarding determinants of telecommunications. On the other hand, it is worth noting that we find significant omitted telecommunications variable bias under economic or social connectivity criteria.