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Most existing empirical work on technology diffusion assumes technologies to remain constant throughout the diffusion process. However, many consumer technologies improve significantly over time. Using data on the characteristics of new mobile handsets over a ten-year period and controlling for potential endogeneity problems, the authors find that handset quality and variety had a significant impact on the global diffusion of mobile telephony. The estimation results further suggest that earlier empirical studies on diffusion may have attributed too much of diffusion to network effects.
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