Networks Externalities as Social Phenomenon in the Process ICT Diffusion

Abstract

ABSTRACT. This paper is designed to fill the gap in knowledge that we have identified regarding the process of diffusion of information and communication technologies and emerging network effects that significantly enhance spread of these technologies. We contribute to the present state of the art by examining the process of ICT diffusion in 50 countries, which in 2015 achieved highest ICT penetration rates. With this aim we consider 2 core ICT indicators -mobile cellular telephony and Internet penetration rates; all statistical data are entirely extracted from World Telecommunications / ICT Indicators database 2016. In the research part we demonstrate ICT diffusion curves and examine elementary descriptive statistics to show how fast and pervasively information and communication technologies have evaded telecommunication markets. Next, relying on panel and dynamic panel models we verify the hypothesis on the existence of network effects that enhance rate of ICT diffusion. Our major findings confirm that across countries being in scope of our analysis, the process of ICT diffusion has been significantly attributed to strong network externalities. JEL Classification: O33, A14, D80

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