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Welfare effects of quality change and new products in the Japanese mobile telecommunications market: 1995-2001

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  • Mitsuru Sunada

Abstract

This paper presents a simple framework based on a discrete choice model to assess the welfare effects of quality change and new products. Such a framework is shown to be useful where the hedonic approach is impracticable. This framework is applied to the Japanese mobile telecommunications market during the period 1995-2001. The estimated qualities for mobile telecommunications services in Japan are shown to have improved rapidly during this period, indicating the importance of quality change in the welfare gains of consumers relative to price change, and the need to adjust quality change in the construction of price indexes. However, it is also proven, at least in the earliest stages, that the effect of new services on consumer welfare was limited.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/10438590500063921
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 14 (2005)
Issue (Month): 8 ()
Pages: 715-733

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Handle: RePEc:taf:ecinnt:v:14:y:2005:i:8:p:715-733

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Related research

Keywords: Quality change; Discrete choice model; Cost of living index; Telecommunications;

References

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  1. Shane M. Greenstein, 1996. "From Superminis to Supercomputers: Estimating Surplus in the Computing Market," NBER Chapters, National Bureau of Economic Research, Inc, in: The Economics of New Goods, pages 329-372 National Bureau of Economic Research, Inc.
  2. Feenstra, Robert C, 1995. "Exact Hedonic Price Indexes," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 77(4), pages 634-53, November.
  3. Aviv Nevo, 2001. "New Products, Quality Changes and Welfare Measures Computed From Estimated Demand Systems," NBER Working Papers 8425, National Bureau of Economic Research, Inc.
  4. Jerry A. Hausman, 1997. "Valuing the Effect of Regulation on New Services in Telecommunications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 28(1997 Micr), pages 1-54.
  5. Bresnahan, Timothy F., 1981. "Departures from marginal-cost pricing in the American automobile industry : Estimates for 1977-1978," Journal of Econometrics, Elsevier, Elsevier, vol. 17(2), pages 201-227, November.
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Cited by:
  1. MATSUURA Toshiyuki & SUNADA Mitsuru, 2009. "Measurement of the Consumer Benefit of Competition in Retail Outlets," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 09015, Research Institute of Economy, Trade and Industry (RIETI).

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