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

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Author Info
Huang, Ching-I

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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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File URL: http://mpra.ub.uni-muenchen.de/6813/
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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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Related research
Keywords: consumption externality; multiple Nash equilibria; demand estimation; mobile phone service; cellular phone service; network effect;

Find related papers by JEL classification:
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models

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References listed on IDEAS
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  1. Miravete, Eugenio J, 2002. "Estimating Demand for Local Telephone Service with Asymmetric Information and Optional Calling Plans," Review of Economic Studies, Blackwell Publishing, vol. 69(4), pages 943-71, October.
  2. Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," Review of Economic Studies, Blackwell Publishing, vol. 70(1), pages 147-165, January.
  3. Nicholas Economides & V. Brian Viard & Katja Seim, 2005. "Quantifying the Benefits of Entry into Local Phone Service," Working Papers 05-08, NET Institute, revised Nov 2005. [Downloadable!]
    Other versions:
  4. Vermeulen, Frederic, 2002. " Collective Household Models: Principles and Main Results," Journal of Economic Surveys, Blackwell Publishing, vol. 16(4), pages 533-64, September. [Downloadable!] (restricted)
    Other versions:
  5. Victor Chernozhukov & Han Hong & Elie Tamer, 2007. "Estimation and Confidence Regions for Parameter Sets in Econometric Models," Econometrica, Econometric Society, vol. 75(5), pages 1243-1284, 09. [Downloadable!] (restricted)
  6. Kenneth E. Train & Daniel L. McFadden & Moshe Ben-Akiva, 1987. "The Demand for Local Telephone Service: A Fully Discrete Model of Residential Calling Patterns and Service Choices," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 109-123, Spring. [Downloadable!] (restricted)
  7. Train, Kenneth E & Ben-Akiva, Moshe & Atherton, Terry, 1989. "Consumption Patterns and Self-selecting Tariffs," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 62-73, February. [Downloadable!] (restricted)
  8. Bresnahan, Timothy F & Reiss, Peter C, 1990. "Entry in Monopoly Markets," Review of Economic Studies, Blackwell Publishing, vol. 57(4), pages 531-53, October. [Downloadable!] (restricted)
  9. Browning, Martin & Francois Bourguignon & Pierre-Andre Chiappori & Valerie Lechene, 1994. "Income and Outcomes: A Structural Model of Intrahousehold Allocation," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1067-96, December. [Downloadable!] (restricted)
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  10. Duffy-Deno, Kevin T., 2001. "Demand for additional telephone lines: an empirical note," Information Economics and Policy, Elsevier, vol. 13(3), pages 283-299, September. [Downloadable!] (restricted)
  11. Rappoport, Paul N. & Taylor, Lester D., 1997. "Toll price elasticities estimated from a sample of U.S. residential telephone bills," Information Economics and Policy, Elsevier, vol. 9(1), pages 51-70, March. [Downloadable!] (restricted)
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