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Intra-Household Effects on Demand for Telephone Service: Empirical Evidence

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  • Huang, Ching-I

Abstract

I present a game-theoretical model to estimate consumption demand, accounting for intra-household interaction among household members. Although multiple Nash equilibria of consumption decisions may exist in a household, model parameters are pointwise identified from household-level data for households with only two members. I propose a semiparametric maximum likelihood estimator and apply it to empirically analyze the subscription decision for cellular phone service in Taiwan. On average, a consumer's probability of subscribing to cellular service rises 35 percentage points when the other household member chooses to subscribe. This result suggests the existence of intra-household network effects on cellular phone consumption. The intra-household effect increases in household income, but decreases in the number of kids and the age difference in a household.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6813.

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Date of creation: Jan 2008
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Handle: RePEc:pra:mprapa:6813

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Keywords: consumption externality; multiple Nash equilibria; demand estimation; mobile phone service; cellular phone service; network effect;

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Cited by:
  1. David Card & Laura Giuliano, 2013. "Peer Effects and Multiple Equilibria in the Risky Behavior of Friends," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1130-1149, October.

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