Choosing standards

In many industries, including telecommunications, a government decision on a standard is needed for the society to reap the benefits from the diffusion of new goods. Delays induced by regulatory bodies either in standard choice or its implementation can be extremely costly. I study governments’ choice of first generation (1G) mobile telephony standards using an international dataset. Larger and richer countries are faster to adopt. Countries take indirect network effects into account in their timing decisions. Political institutions systematically affect the speed of adoption: Democracies give telecom human capital and indirect network effects more weight.