Quality upgrade and the diffusion of innovation: Effects on Mobile Internet Usage

This paper examines the impact of a quality upgrade on the adoption rate of new technologies, exploiting the staggered transition from 3G to 4G in mobile internet usage in Greece. We use individual monthly mobile consumption data from a major Greek provider from 2011 to 2013. Our results show that introducing 4G leads to a significant increase in mobile internet consumption, both among existing users and in attracting new users. This innovation accelerates the diffusion of mobile internet usage, particularly in areas with more technologically savvy consumers. Consumers start responding to the quality shock with a few months' delay, and mobile internet usage increases gradually, suggesting a learning process. Furthermore, adoption rates are heterogeneous across the population and are driven by young men, who increase their use more than women and consumers aged over 45.