Externalities and complementarities in telecommunications dynamics

Abstract This paper focuses on the complementarities between the international diffusion of computers and the variance in the levels of telecommunications revenue per installed line in 30 countries. The economic analysis elaborates on the Marshallian notion of derived demand: the hypothesis is that the increasing variance in the levels of telecommunications traffic per line across countries is a consequence of the growing levels of computer communication, which in turn can be approximated by the diffusion of computers. Empirical analysis confirms the strong positive correlation between computer density and telecommunications intensity.