Network Externalities: Towards a Taxonomy of the Concept and a Theory of Their Effects on the Performance of Firms and Regions

The wide technological potentialities of the latest applications in telecommunications has revitalised interest in the diffusion and adoption mechanisms of new technologies. Until a few years ago, the demand for telecommunications services was generally analysed within a conventional framework which focused attention on the role of price and revenue elasticity. In recent years, however, greater attention has been given to some new mechanisms which are radically influencing the demand for telecommunications services. These mechanisms have been pinpointed by a growing literature as ‘network externalities’ and ‘learningprocesses’ (Antonelli, 1989). Since the publication of Rohlf’s paper on network externality in 1974, this concept has become the subj ect of many studies which interpret it as a quintessential issue in the diffusion of new technologies₁.