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This paper provides an empirical study on the extent of network effects for mobile telecommunications. The authors specify and estimate a model of consumer demand for mobile telephone calls, to identify the extent of network externalities and to prove that, with network effects, the demand curve is not downward sloping everywhere but it has an increasing part, verifying empirically the existence of the critical mass of the installed base of consumers. In order to do that they use a panel data of the 30 OECD Countries from 1989 to 2006 for estimating a quadratic relationship between price of 3-minute cellular call and the installed base of subscribers.
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