No 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. JEL Classifications: C67, D11, D12, D21

No abstract

Wireless data communication (WDC) services are increasingly penetrating the market. The two main alternative WDC technologies are wireless LAN and mobile Internet. Services based on these technologies display differences in quality attributes such as terminal device, data transmission speed, pricing scheme and so on. How consumers choose between these two alternatives will be determined by their preferences regarding such quality attributes. In turn, their preferences will affect the evolution of WDC services and related technologies. This study employs a conjoint analysis of consumer valuations of quality attributes of wireless LAN and mobile Internet services. Respondents rate hypothetical service alternatives featuring various combinations of quality attributes. By estimating consumer willingness to pay for the attributes of WDC services, the authors predict the evolution of WDC services and related technologies along various quality dimensions, make a comparison with the results of a previous study, and draw policy implications for national‐and company‐level R&D strategies.

The concept of production efficiency has been studied since the 1960s, but consumption activity as well may be inefficient for various reasons, such as product complexity, lack of information, the bounded rationality of the consumer and imperfect markets, to name a few. This study proposes a conceptual framework for measuring the consumption efficiency of differentiated products, based on traditional utility theory. It employs stochastic frontier analysis (SFA) in an empirical analysis. It makes use of hedonic price theory to link traditional utility theory and the SFA framework. When the developed model is applied to the Korean personal computer market, empirical results indicate the levels and distribution of consumption efficiency in that market. The findings afford us a better understanding of the characteristics of the innovation process in that market.