Diffusion, substitution and competition dynamism inside the ICT market: The case of Japan

Abstract

Under the new information society paradigm that emerged in the 1990s, contrary to its conspicuous achievement as an industrial society, Japan is experiencing a vicious cycle between non-elastic institutions and insufficient utilization of the potential benefits of information and communication technology (ICT). However, a dramatic deployment of mobile telephones with Internet access service such as NTT DoCoMo's i-mode service in the late 1990s provides encouragement that, once the potential is exploited, Japan's institutional systems can effectively stimulate the self-propagating nature of ICT. The rapid deployment of Internet Protocol (IP) mobile service in Japan can be attributed to worldwide advances in the utilization of personal computers (PCs) and the Internet. Thus, a complex technology web triggered by the dramatic advancement of PCs and the Internet and co-evolving diffusion, substitution and competition dynamism has emerged in the global ICT market, particularly in Japan's mobile communication business. The above observations prompt the hypothetical view that, despite a lack of institutional elasticity, recent advances in Japan's IP mobile service deployment can be attributed to a co-evolutionary dynamism between diffusion, substitution and competition inside the ICT market. Thus, policy questions could be how to create such a co-evolutionary dynamism by means of ICT innovation, enriched functions, reduced price and competitive environment. In order to demonstrate the foregoing hypothesis, an empirical analysis of the mechanism co-evolving diffusion, substitution and competition dynamism inside Japan's ICT market is attempted by utilizing four types of diffusion models identical to respective diffusion dynamics.