Abstract
The paper provides an analysis of network externalities in the telecommunications sector and their effects on corporate and regional performance. It can essentially be regarded as part of the general theoretical reflection on the role of telecommunications in economic development, by emphasising the importance of telecommunications for future economic growth. However, the advantages derived from these technologies stem not only from the technological changes taking place in the sector, but also from their nature as interrelated technologies. This stems from the fact that when a new subscriber joins the network, the marginal costs of his entry are lower than the marginal benefits he creates for people (firms) already networked. This difference between marginal costs and benefits (in favour of the benefits) inevitably reflects on industrial performance and — via multiplicative effects — on regional performance. The paper presents an empirical part where an effort is made to measure telecommunications network externalities. Regional differences in the exploitation of network externalities emerge between firms located in the north and in the south of Italy.
Similar content being viewed by others
References
Allen D (1988) New Telecommunications Services: Network Externalities and Critical Mass. Telecommunications Policy, September, pp 257–271
Allen D (1990) Break-up of the American Telephone Company: the Intellectual Conflict Before and Since, paper presented at the 8th International Conference of the International Telecommunications Society, on “Telecommunications and the Challenge of Innovation and Global Competition”, held in Venice, 18–21 March
Amiel M, Rochet J (1987) Concurrence entre Réseaux de Télécommunications: les Conséquences des Externalités Négatives. Ann Télécomm 42 (11/12):642–649
Antonelli C (1991) The International Diffusion of Advanced Telecommunications: Opportunities for Developing Countries. OECD Publication
Blankart C, Knieps G (1992) The Critical Mass Problem in a Dynamic World: Theory and Applications to Telecommunication. In: Klaver F, Slaa P (eds) Telecommunications: New Signposts to Old Roads. IOS Press, Amsterdam, pp 55–63
Bradley S, Hausman J (eds) (1989) Future Competition in Telecommunications. Harvard Business School Press
Brock G (1981) The Telecommunications Industry: The Dynamic of Market Structure. Cambridge, Harvard University Press
Brosio G (1986) Economia e Finanza Pubblica. La Nuova Italia Scientifica, Rome
Camagni R, Capello R (1989) Scenari di Sviluppo della Domanda di Sistemi di Telecomunicazione in Italia. Fin Mark Prod 1:87–138
Capello R (1991) L'assetto Istituzionale nel Settore delle Telecomunicazioni. In: Camagni R (ed) Computer Networks: Mercati e Prospettive delle Tecnologie di Telecomunicazione. Etas Libri, Milan, pp 163–260
Capello R (1994) Spatial Economic Analysis of Telecommunications Network Externalities. Avebury, Aldershot
Crandall R, Flamm K (eds) (1989) Changing the Rules: Technological Change, International Competition and Regulation in Communications. The Brooking Institution
Curien N, Gensollen M (1987) A Functional Analysis of the Network: a Prerequisite for Deregulating the Telecommunications Industry. Ann Télécomm 42 (11/12):629–641
Foreman-Peck J, Mueller J (1988) The Spectrum of Alternatives of Market Configurations in European Telecommunications. research study, Berlin-Newcastle, April
Gillespie A, Hepworth M (1986) Telecommunications and Regional Development in the Information Economy, Newcastle Studies of the Information Economy, CURDS, Newcastle University, no. 1, October
Gillespie A, Williams H (1988) Telecommunications and the Reconstruction of Regional Comparative Advantage. Environ Plan A 20:1311–1321
Gillespie A, Goddard J, Hepworth M, Williams H (1989) Information and Communications Technology and Regional Development: an Information Economy Perspective. Sci Technol Ind Rev 5:86–111
Goddard J, Charles D, Howells J, Thwaites A (1987) Research and Technological Development in the Less Favoured Regions of the Community — STRIDE. Commission of the European Communities, Document, Luxemburg
Mueller J (1991) The European International Market for Telecommunications. Eur Econ Rev 496–503
Nijkamp P (1977) Theory and Application of Environmental Economics. North-Holland, Amsterdam
Philip G (1990) The Deregulation of Telecommunications in the EC. Int J Inf Manag 1:67–75
Phillips A (1990) Changing Markets and Institutional Inertia: a Review of US International Telecommunications Society on “Telecommunications and the Challenge of Innovation and Global Competition”, held in Venice, 18–21 March
Porter M (1990) Competitive Advantage of Nations. McMillan, London
Saunder R, Warford J, Wellenius B (1983) Telecommunications and Economic Development. The Johns Hopkins University Press, London
Von Weizsaecker CC, Wieland B (1988) Current Telecommunications Policy in West Germany. Oxf Rev Econ Policy 4(2):20–39
Williams H, Taylor J (1991) ICTs and the Management of Territory. In: Brotchie J, Batty M, Hall P, Newton P (eds) Cities of the 21st Century. Halstead Press, Longman, Cheshire, pp 293–306
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Capello, R., Nijkamp, P. Telecommunications technologies and regional development: theoretical considerations and empirical evidence. Ann Reg Sci 30, 7–30 (1996). https://doi.org/10.1007/BF01580535
Issue Date:
DOI: https://doi.org/10.1007/BF01580535