Modeling Network Effects in Techno-Economic Analysis: A 5G Platform Case for Connected Vehicles

Abstract

Techno-economic analysis investigates the economic performance of large technological systems by combining both economic and technical perspectives into a comprehensive model. We claim that such analysis should include the endogenous characteristics of adoption. This is especially important for the latest development of telecommunication systems and related platforms, which involve multiple types of users and network effects. Through a 5G platform case, this article shows how to model service and data network effects by means of system dynamics to be included in investment calculations of techno-economic analysis. Through a careful study of the feedback loops related to network effects, the dynamic of adoption can be properly analyzed, which is crucial for defining a strategy for large system deployments.