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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.

Suggested Citation

  • Mitsuru Sunada, 2005. "Welfare effects of quality change and new products in the Japanese mobile telecommunications market: 1995-2001," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(8), pages 715-733.
  • Handle: RePEc:taf:ecinnt:v:14:y:2005:i:8:p:715-733 DOI: 10.1080/10438590500063921
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    References listed on IDEAS

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    1. Feenstra, Robert C., 1995. "Estimating the effects of trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 30, pages 1553-1595 Elsevier.
    2. Bresnahan, Timothy F., 1981. "Departures from marginal-cost pricing in the American automobile industry : Estimates for 1977-1978," Journal of Econometrics, Elsevier, vol. 17(2), pages 201-227, November.
    3. Aviv Nevo, 2003. "New Products, Quality Changes, and Welfare Measures Computed from Estimated Demand Systems," The Review of Economics and Statistics, MIT Press, pages 266-275.
    4. Shane M. Greenstein, 1996. "From Superminis to Supercomputers: Estimating Surplus in the Computing Market," NBER Chapters,in: The Economics of New Goods, pages 329-372 National Bureau of Economic Research, Inc.
    5. Feenstra, Robert C, 1995. "Exact Hedonic Price Indexes," The Review of Economics and Statistics, MIT Press, pages 634-653.
    6. Feenstra, Robert C, 1995. "Exact Hedonic Price Indexes," The Review of Economics and Statistics, MIT Press, pages 634-653.
    7. 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, pages 1-54.
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    Cited by:

    1. MATSUURA Toshiyuki & SUNADA Mitsuru, 2009. "Measurement of the Consumer Benefit of Competition in Retail Outlets," Discussion papers 09015, Research Institute of Economy, Trade and Industry (RIETI).

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