Advanced Search
MyIDEAS: Login

Estimating Consumers’ Willingness to Pay for the Individual Quality Attributes with DEA

Contents:

Author Info

  • Lee, Jeongdong
  • Repkine, Alexandre
  • Hwang, Seogwon
  • Kim, Taiyoo

Abstract

In a highly competitive environment a product’s commercial success depends increasingly more upon the ability to satisfy consumers’ preferences that are highly diversified. Since a consumer product typically comprises a host of technological attributes, its market value incorporates all of the individual values of technological attributes. If the willingness-to-pay (WTP) for individual technological characteristics of a product is known, one can conjecture the overall WTP or the imputed market price for the product. The market price listed by the producer has to be equal to or lower than this WTP for the commercial survival of the product. In this paper we propose a methodology for estimating the value of individual product characteristics and thus the overall WTP of the product with DEA. Our methodology is based on a model derived from the consumer demand theory on the one hand, and the recent theoretical developments on the flexible DEA frontiers on the other hand. The paper also presents a real case study for the mobile phone market, which is characterized by its high speed of innovation. The suggested model and its empirical applications has implications for the extension of DEA methodology to the estimation of market value of a complex multi-attribute product and/or of a value of quality attribute that is not explicitly marketable in isolation. We also expect that the framework will shed some light on the successful way of product differentiation when the cost information for individual characteristics is available.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/7848/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7848.

as in new window
Length:
Date of creation: Oct 2004
Date of revision:
Publication status: Published in Journal of the Operational Research Society No. 10.vol. 5(2004): pp. 1059-1064
Handle: RePEc:pra:mprapa:7848

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: DEA; efficient consumption; willingness to pay; multi-attribute product pricing;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  2. Alcantud, J. C. R. & Manrique, A., 2001. "Continuous representation by a money-metric function," Mathematical Social Sciences, Elsevier, vol. 41(3), pages 365-373, May.
  3. Blumenschein, Karen & Johannesson, Magnus & Yokoyama, Krista K. & Freeman, Patricia R., 2001. "Hypothetical versus real willingness to pay in the health care sector: results from a field experiment," Journal of Health Economics, Elsevier, vol. 20(3), pages 441-457, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Inha Oh & Jeong-Dong Lee & Seogwon Hwang & Almas Heshmati, 2010. "Analysis of product efficiency in the Korean automobile market from a consumer’s perspective," Empirical Economics, Springer, vol. 38(1), pages 119-137, February.
  2. Ward, Damian Robert, 2009. "Product differentiation and consumption efficiency in mortgage markets," Journal of Business Research, Elsevier, vol. 62(8), pages 805-809, August.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:7848. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.