Market structure, Regulation and the Speed of Mobile Network Penetration

The speed of market penetration (i.e. diffusion) is an important summary measure of how well the market works for potential consumers of a new product. This paper identifies the structural features associated with rapid diffusion of mobile telephony. We use a sample of thirty countries over the sixteen years in which average penetration rose from 2% to 97% of the population (earlier studies observed only the initial years of diffusion during which there was typically only one or two networks). We find a non-monotonic effect of market structure, with three firms maximising consumer uptake. Privatization and independent regulation are also important positive factors. Further results show that the market structure effect works only partially through the level of prices.