Intergenerational effects in the diffusion of new technology: The case of mobile phones

Many new technologies exhibit clear generational changes. The empirical literature on technology diffusion traditionally analyses the spread of new technologies generically. We use data from the mobile phone industry, where first-generation (1G) and second-generation technologies (2G) can be clearly identified, to analyse the role of generational effects in diffusion. The results from a generation specific approach differ significantly from those of a generic model. There are positive within-generation network effects. 1G (2G) has a positive (negative) effect on 2G (1G) diffusion. Both generations are substitutes for fixed phones. Effects of competition and payment schemes are also analyzed.