INNOVATION DIFFUSION: MOBILE TELEPHONY ADOPTION IN CHINA

The rapid diffusion of mobile telephony is an important subject in diffusion studies of innovation. This study attempts to learn how mobile telephony diffuses in China, which has the most mobile telephone subscribers worldwide, in terms of the appropriate growth model and forces driving the diffusion. To identify the appropriate growth model, this study compares the fitness and forecasting ability of three conventional models - the Logistic, Bass, and Gompertz models. The determinants of the diffusion rate are then analyzed based on the most appropriate model. Empirical results, based on data for mobile telephone subscribers in China for 1986-2007, indicate that the Gompertz model performs best. Moreover, the four determinants for the diffusion rate are: number of fixed-line telephone subscribers, the low cost of mobile handsets, pre-paid service and the personal handy-phone system (PHS) service.