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The Measurement of Consumption Efficiency Considering the Discrete Choice of Consumers

Jeong-Dong Lee (), Seogwon Hwang and Tai-Yoo Kim

Journal of Productivity Analysis, 2005, vol. 23, issue 1, 65-83

Abstract: In this study we propose a mathematical definition of the consumption efficiency of multi-attribute products in the price–quality space. A new model, the discrete Range Adjusted Measure (RAM) model, is suggested as an empirical tool to measure the level of consumption efficiency. We further discuss the effect of consumption efficiency on the innovation incentive. Empirical work is made for the mobile phone market. We expect that the consumption efficiency concept will contribute to the extension of the traditional framework of production efficiency analysis on the one hand and to the understanding of the nature of innovation in a technology-intensive market on the other hand. Copyright Springer Science+Business Media, Inc. 2005

Keywords: consumption efficiency; DEA; RAM; discrete choice; random utility models; mobile phone (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/s11123-004-8548-y

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