Functionality development dynamism in a diffusion trajectory: A case of Japan's mobile phones development

While it is generally accepted that Information Technology (IT) has a self-propagating function which ensures that the more widespread its use, the greater its functionality, its emerging dynamism remains a black box.This paper attempts to shed some light on this dynamism through utilizing monthly trend data for the number of Japan's mobile phone subscribers over the last 12 years. A bi-logistic growth model demonstrating the diffusion trajectory initiated by both generations of mobile phones was constructed, with the goal of identifying the increase in the functionality development in the transition from traditional mobile phones with a simple communication function (1st wave mobile phone) to mobile phones with an Internet protocol function (2nd wave mobile phone).Through an empirical analysis utilizing the bi-logistic growth model, it was determined that the 2nd wave mobile phone emerged at an earlier stage of diffusion trajectory than the 1st stage mobile phone, which enabled a sustainable functionality development in Japan's mobile phones over the decade.Factors governing a dramatic decrease in mobile phones prices were analyzed, utilizing the result of the measurement of functionality development. This led to the discovery that while an increase in functionality development enhanced the price of mobile phones, this increase accelerated self-propagating diffusion, thereby enabling a dramatic reduction in prices through the effects of learning exercise and economies of scale.Based on the foregoing findings, the driving forces of self-propagating functionality development were analyzed, and it was determined that effective utilization of potential resources in innovation (e.g., assimilation of spillover technology and learning effects) is the key driving forces behind self-propagating functionality development.     

Willingness to pay for other species' well-being

Benefit-cost analysis of environmental policies typically focuses on benefits to human health and well-being. For other species, economists have attempted to measure human WTP for changes in the numbers of individuals for different types of wildlife, and to preserve biodiversity. When it comes to humans' WTP for improvements in the quality-of-life for other species, however, the evidence is limited. Morbidity and quality-of-life considerations may be particularly important to the task of valuing non-fatal harm to wildlife in the wake of an environmental disaster. We argue that the other species morbidity-reduction component of WTP should be calculated net of any “outrage” component associated with the cause of the harm. This net WTP is likely to be correlated with the premium that people are willing to pay for chicken products from birds for which the quality-of-life has been enhanced by improved animal welfare measures. This paper uses a conjoint choice stated preference survey to reveal the nature of systematic heterogeneity in preferences for “humanely raised” versus “conventionally raised” chicken. We also use latent class analysis to distinguish between two classes of people—those who are willing to pay a premium for humanely raised chicken, and those who are not.     

An estimation of the future demand for portable Internet service in Korea

Portable Internet service (PIS), which refers to wireless Internet service that can be accessed via a portable terminal at every time and at any place, is scheduled to be launched in Korea in early 2006. Thus, both the government and the industry need to obtain quantitative information on the future demand for the service. This study attempts to estimate future demand for the PIS, to analyze the determinants of the demand, and to conduct pre-test-market evaluation of the service. To this end, the dichotomous choice contingent valuation method is employed. On the whole, respondents accepted the contingent market and were willing to contribute a significant amount, on average. This willingness varies according to individual characteristics. Finally, the study discusses the importance of including valuation method in a pre-test-market evaluation of the PIS and presents the implications of the results, such as the mean willingness to pay (WTP) and the effects of individual characteristics and concerns about the service on the WTP.     

Incorporating Discontinuous Preferences into the Analysis of Discrete Choice Experiments

Data from a discrete choice experiment on improvements of rural landscape attributes are used to investigate the implications of discontinuous preferences on willingness to pay estimates. Using a multinomial error component logit model, we explore differences in scale and unexplained variance between respondents with discontinuous and continuous preferences and condition taste intensities on whether or not each attribute was considered by the respondent during the evaluation of alternatives. Results suggest that significant improvements in model performance can be achieved when discontinuous preferences are accommodated in the econometric specification, and that the magnitude and robustness of the willingness to pay estimates are sensitive to discontinuous preferences.     

Estimating demand function parameters of mobile applications

The vibrant market for mobile applications has raised awareness of several professional and also voluntary software developers. The key question especially for professional developers is how to improve the profit gained with a developed app. Recent research provided evidence on the factors that determine the demand of a mobile app. This paper presents a procedure to estimate demand function parameters that are required for developing pricing, advertising and also product update strategies. More specifically, the procedure estimates an app’s maximal willingness to pay, demand elasticity on price and network value. The procedure is based on the Fulfilled Expectations Cournot Model and requires knowledge about the apps being considered as substitutes to each other. It is applied to a data set consisting of download rank data of Apple iPhone apps.     

Comorbidities and the willingness to pay for health improvements

We show that the willingness to pay for health improvements increases with the severity and probability of occurrence of comorbidities. This result, which is obtained under mild restrictions on the shape of the utility function, has important implications for cost benefit studies applied to health care. In particular it implies that the discrimination of the elderly, believed to be implicit in cost benefit analysis, is less of a problem than commonly thought.     

The future of mobile shopping: The interaction between lead users and technological trajectories in the Japanese market

This paper uses the concepts of lead users and technological trajectories and the current status of mobile shopping in Japan to forecast the future of mobile shopping. In interviews with more than 100 Japanese and foreign firms between 2000 and 2005, the author investigated the impact of a number of technological trajectories on mobile shopping applications that are suggested to be promising ones based on the behavior of lead users. Push-based Internet mail and other key services that are not yet available in Western markets were the initial drivers of the market for mobile shopping in Japan between 2001 and 2003. Currently, the fastest growing market for mobile shopping in Japan involves the integration of mobile sites with other media such as magazines and radio and television programs where these other media compensate for the small screens of mobile phones. This paper forecasts the impact of improvements along a number of technological trajectories on the integration of mobile sites with other media.     

Endogenous private safety investment and the willingness to pay for mortality risk reductions

When individuals cannot undertake safety-improving expenditures, the effect of an increase in the initial risk on the willingness to pay (WTP) for mortality risk reduction is positive because of the dead-anyway effect. When they can undertake safety-improving expenditures, the effect of an increase in the initial risk is governed by two effects: The dead-anyway effect which is positive and the high-payment effect which is negative. We treat the two types of risk-reducing expenditures, endogenous and exogenous, as inputs in a safety-improving technology function and find conditions that guarantee that the high-payment effect dominates.     

Forecasting future demand for large-screen television sets using conjoint analysis with diffusion model

The methodological framework proposed in this paper addresses two limitations of the basic Bass diffusion model: that it does not reflect competition among products nor does it forecast demand for products that do not exist in the marketplace. The model consists of four steps. First, to investigate consumer preferences for product attributes, we use conjoint analysis to estimate the utility function of consumers. Next we estimate the dynamic price function of each competing product to reflect technological changes and the evolving market environment. Then we derive dynamic utility function by combining the static utility function and the price function. Finally, we forecast the sales of each product using estimated market share and sales data for each period, which are derived from the dynamic utility function and from the Bass diffusion model, respectively.We apply this model to South Korea's market for large-screen televisions. The results show that (1) consumers are sensitive to picture resolution and cost and (2) in the near future, should the market see the introduction of liquid crystal display (LCD) TVs with screens larger than 50 inches, the high resolution and steep price drop of LCD will lead LCD TVs to capture a larger market share than TVs with other display types. Finally, our results show that TVs with 40-inch screens are preferred over TVs with larger screens.     

Popular Support for Climate Change Mitigation: Evidence from a General Population Mail Survey

Using a sample of 1,651 US households, we explore some determinants of willingness to pay (WTP) for climate change mitigation programs. Our mail survey had a relatively low response rate, so we first use several additional data sources to build a detailed sample selection model. This model uses features of the survey instrument, measures of geographic vulnerability to climate change, seasonality, the political mix in the county, attributes of the address or addressee, and a set of factor scores from an extensive factor analysis of all census tracts in the US. We estimate this model jointly with a model to explain climate policy preferences as a function of the domestic and international distribution of policy costs as well as the climate change impacts that each respondent believes will occur under a policy of business-as-usual. Despite statistically significant patterns of nonresponse, selectivity effects are minimal in this case. WTP for climate change mitigation is greater when the domestic incidence of mitigation costs is borne mostly through higher energy taxes. It is also greater when costs are understood to be shared internationally with other groups of countries, rather than being borne mostly by a country group including the US. People are generally more willing to pay for climate change mitigation if they believe that the harm caused by climate change impacts will be substantial, rather than just moderate. The assistance of former UCLA undergraduate students Ivka Adam, Tashi Ghale, Michelle Gogolewski, Vilija Gulbinas, and Lindy Olsson was essential to survey development and administration. This paper is based upon work supported in part by the National Science Foundation under Grant No. 9818875 to UCLA, with additional support from the Raymond F. Mikesell Foundation at the University of Oregon. Any opinions, findings, and conclusions or recommendations expressed in this paper are those of the authors and do not necessarily reflect the views of either the National Science Foundation or ICF International.     

An Experimental Validation of Hypothetical WTP for a Recyclable Product

Using a within-subject experiment, we compare hypothetical andreal willingness to pay (WTP) for an improvement in therecyclability of a product. Subjects are faced with a real paymentscenario after they have responded to a hypothetical question.Contrary to most of the results obtained in similar studies, at apopulation level, there are no significant median differencesbetween actual and hypothetical stated values of WTP. However,within-subject comparisons between hypothetical and actual valuesindicate that subjects stating a low (high) hypothetical WTP tendto underestimate (overestimate) the value of their actualcontributions.     

Discrete choice model analysis of mobile telephone service demand in Japan

This paper analyzes the demand for mobile telephones including second generation (2G) and third generation (3G) by using a discrete choice model called a mixed logit model. First, we examine the substitution patterns of the demand for mobile telephones and show that demand substitutability among alternatives is stronger within the provider nest category than within the standard nest category in mobile telephone services. The closest substitute for NTT’s 3G service is NTT’s 2G service, rather than KDDI’s 3G service, for example. Second, we investigate the elasticities of demand for various functions including e-mail, Web browsing, and moving picture delivery. Consequently, we cannot observe marked differences between 2G and 3G services based on these calculated elasticities, indicating that it takes time for 3G subscribers to gain proficiency with such new services.      

Meta-Analysis,Benefit Transfer,and Methodological Covariates: Implications for Transfer Error

Meta-regression models in the valuation literature demonstrate that willingness to pay estimates vary according to methodological factors. Neither theory nor characteristics of policy sites dictate the treatment of associated covariates within benefit transfer, however, and the literature provides few insights into potential impacts of common empirical treatments. This paper introduces a method to systematically characterize the impact of methodological variables on transfer error. Using a repeated leave-one-out convergent validity framework, the analysis contrasts errors for a hypothetical ideal case in which correct methodological covariate treatments are known to the realistic case in which the correct treatment is unknown. Results indicate that the common assumption of mean values for methodological covariates leads to only a modest increase in mean transfer error relative to that found in the hypothetical ideal case.     

The effect of experience and quantity-based pricing on the valuation of a curbside recycling program

Quantity-based pricing for garbage collection services and recycling programs are becoming increasingly popular methods of meeting municipal solid waste diversion objectives. This article investigates household willingness to pay (WTP) for a pilot curbside recycling program (CRP) in the presence of a quantity-based pricing scheme for garbage collection services, which allows a household to alter their garbage container size at a reduced price. Unlike previous studies that have modeled the simultaneity of these household decisions as a two-step process, we jointly estimate the household's intentions using a full-information maximum-likelihood (FIML) approach. Our results show a strong positive correlation between a household's WTP for a CRP and its stated intention to reduce its garbage container size when a CRP is offered. The positive correlation suggests that WTP will be higher for households which are more likely to reduce their garbage container size. Thus, in the presence of quantity-based pricing, a household's WTP for recycling more fully reflects the marginal social costs of garbage disposal.     

An operational structure for clarity in ecosystem service values

Analyses used to value ecosystem services often confuse final ecosystem services with ecological functions that provide indirect benefit. Typologies of ecosystem services, such as that developed by the Millennium Ecosystem Assessment, do not ameliorate these challenges. Among the causes of ambiguity in classifying values associated with intermediate versus final ecosystem services are (1) the lack of simple, broadly applicable guidelines to assist natural and social scientists in deriving consistent and replicable classifications, and (2) attempts to define universal typologies of final services that apply to all beneficiaries. This paper presents an operational mechanism for determining whether a biophysical feature, quantity, or quality represents a final ecosystem service for an inclusive suite of beneficiaries. It is designed for straightforward application by those without expertise in natural or social sciences, and can be used within existing typologies. Illustrations of the structure demonstrate how the resulting classifications avert double counting and other ambiguities.     

Incremental and Average Control Costs in a Model of Water Quality Trading with Discrete Abatement Units

This paper answers three questions related to the discrete nature of pollution abatement: (i) does a source’s incremental control cost (as defined by the U.S. Environmental Protection Agency) necessarily exceed its average control cost, (ii) is incremental control cost a better approximation of a source’s willingness to pay for abatement credits than average control cost, and (iii) exactly how does trading in discrete and continuous abatement markets differ? We find that the answer to the first two questions are both “no”, suggesting that the U.S. Environmental Protection Agency needs to refine its reliance on incremental control cost as the sole measure upon which to assess the financial feasibility of water quality trading. In answer to the third question, we show that the outcome of bilateral trading in the presence of discrete abatement is determined by comparing the gains from trade associated with the full sequence of possible “sunk cost trading” scenarios. For the most common case where trading partners’ average control cost curves “cross,” the trading outcome with discrete abatement is inherently sensitive to the initial allocation of abatement responsibilities.     

The effect of distance on willingness to pay values: a case study of wetlands and salmon in California

Most contingent valuation studies in the literature utilized a pre-determined geographic market area for their sample frame. In other words, they did not include variables that would measure the extent of the geographic areas over which to aggregate willingness to pay. These studies implicitly assumed that the effects of geographic distance were moot; an assumption that could have led to an understatement of the aggregate benefit values computed in these studies. The overall goal of this study was to determine if distance affects willingness to pay for public goods with large non-use values. The data used came from a contingent valuation study regarding the San Joaquin Valley, CA. Respondents were asked about their willingness to pay (WTP) for three proposed programs designed to reduce various environmental problems in the Valley. A logit model was used to examine the effects of geographic distance on respondents' willingness to pay for each of the three programs. Results indicate that distance affected WTP for two of the three programs (wetlands habitat and wildlife, and the wildlife contamination control programs). We calculate the underestimate in benefits if the geographic extent of the public good market is arbitrarily limited to one political jurisdiction.     

The effect of individual ‘ability to choose’ (scale heterogeneity) on the valuation of environmental goods

Environmental valuation methods, such as choice experiments, are increasingly being used to value complex and often unfamiliar environmental goods. A potential risk is that some survey respondents may not be capable of developing and expressing preferences for such goods. The noise from these individuals may then conceal the well-defined preferences of other respondents and affect valuation estimates. We address this problem by estimating a range of models that accounts for scale heterogeneity (which we interpret as a respondent's ability to choose: ATC) and taste heterogeneity. These models are applied to two case studies: amenity from coastal defence and biodiversity. In both case studies, model fit was improved in a scale-heterogeneity multinomial-logit (S-MNL) model (compared to a standard MNL model) suggesting the accounting for ATC (scale heterogeneity) improved preference revelation. A mixed multinomial-logit (MIXL) model outperformed the S-MNL model suggesting that accounting for taste heterogeneity was also important. However, a generalised multinomial-logit (G-MNL) model improved model fit over the MIXL model only for the biodiversity data suggesting that for these data both taste heterogeneity and ATC were important. We conclude that accounting for ATC can improve the reliability and robustness of the results when valuing complex or unfamiliar environmental goods.