Welfare effects of quality change and new products in the Japanese mobile telecommunications market: 1995-2001

Mitsuru Sunada

Economics of Innovation and New Technology, 2005, vol. 14, issue 8, 715-733

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.

Keywords: Quality change; Discrete choice model; Cost of living index; Telecommunications (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1080/10438590500063921

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