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

  • Huang, Ching-I

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: https://mpra.ub.uni-muenchen.de/6813/1/MPRA_paper_6813.pdf
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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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  1. Huang, Ching-I, 2007. "Estimating Demand for Cellular Phone Service under Nonlinear Pricing," MPRA Paper 6459, University Library of Munich, Germany.
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  21. Panle Jia, 2008. "What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retailing Industry," Econometrica, Econometric Society, vol. 76(6), pages 1263-1316, November.
  22. 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.
  23. Lukasz Grzybowski, 2008. "Estimating Switching Costs in Mobile Telephony in the UK," Journal of Industry, Competition and Trade, Springer, vol. 8(2), pages 113-132, June.
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