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

Huang, Ching-I (2008): Intra-Household Effects on Demand for Telephone Service: Empirical Evidence.

Abstract

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: consumption externality, multiple Nash equilibria, demand estimation, mobile phone service, cellular phone service, network effect
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D13 - Household Production and Intrahousehold Allocation; D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C35 - Discrete Regression and Qualitative Choice Models ; Discrete Regressors ; Proportions