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Willingness to Pay for Service Attributes in the Japanese Digital Content Market

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Abstract

We estimate a mixed logit demand model for the Japanese digital content market and measure willingness to pay for service attributes. We find that the willingness to pay for an extra unit of service quality ranges from 62 Yen to 83 Yen per month. Meanwhile, the switching cost, a measure of disutility from switching to other service providers is estimated as 340 Yen ($3) per month, which is approximately the same as the current monthly subscription fee.

Suggested Citation

  • Donghun Kim & Philip Sugai, 2006. "Willingness to Pay for Service Attributes in the Japanese Digital Content Market," Working Papers EMS_2006_14, Research Institute, International University of Japan.
  • Handle: RePEc:iuj:wpaper:ems_2006_14
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    File URL: http://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2006_14.pdf
    File Function: First version, 2006
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    References listed on IDEAS

    as
    1. Paul Klemperer, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 375-394.
    2. Lee, Jongsu & Kim, Yeonbae & Lee, Jeong-Dong & Park, Yuri, 2006. "Estimating the extent of potential competition in the Korean mobile telecommunications market: Switching costs and number portability," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 107-124, January.
    3. Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
    4. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Mixed logit; Hierarchical Bayesian model; Japanese Digital Content Market;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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