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Consumersʼ Preferences of the Quality and Price of Personal Services

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  • Morikawa, Masayuki

Abstract

This study uses original survey data from individuals and presents evidence regarding consumersʼ preferences of the quality and price of personal services. The results indicate that consumers perceive the quality of market services to be improved, suggesting that the real productivity growth rate of the service sector is underestimated. Although the willingness to pay for high quality services is confirmed, the amount is quite heterogeneous among individuals, which cannot be explained by observable characteristics such as age and income. The price elasticity of the inter-temporal substitution of service demand is relatively large, suggesting that there is a possibility of smoothening service-demand by utilizing a price-setting strategy. Substitutability between market services and household production differs according to individual services.

Suggested Citation

  • Morikawa, Masayuki, 2018. "Consumersʼ Preferences of the Quality and Price of Personal Services," Economic Review, Hitotsubashi University, vol. 69(4), pages 314-327, October.
    • Handle: RePEc:hit:ecorev:v:69:y:2018:i:4:p:314-327
    DOI: 10.15057/29640
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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