Effect of price on the diffusion of cellular subscriptions in Finland

The aim of this study is to find out the effect of pricing on the diffusion of cellular subscriptions in Finland. There is a lack of studies on the effect of (telecommunications) service pricing on its diffusion. In the present study, a modified logistic model is applied for estimating the impact of price on the diffusion. The effect of cellular tariffs and cellular phone prices on the market potential and the diffusion rate are evaluated. Whereas almost all previous studies focusing on durables suggest that price affects either the market potential or the diffusion rate, the results of this study indicate that cellular call tariffs and cellular phone prices are not significant predictors of diffusion of cellular subscriptions. It is thus concluded that the logistic diffusion model might implicitly capture the somewhat constant price decline of cellular communications.