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Difference between Adoption and Access Frequency to Internet and Consumer Surplus

Author

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  • Walid Hadhri

    (UAQUAP - Unité de Recherche en Analyses Quantitatives Appliquées à la l'Economie et à la Gestion - ISG - Institut Supérieur de Gestion de Tunis [Tunis] - Université de Tunis)

  • Mohamed Ayadi

    (ISG - Institut supérieur de gestion - Université de Tunis, Ecole Supérieure des Sciences Economiques et Commerciales de Tunis - Université de Tunis)

  • Adel Ben Youssef

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

Abstract

The objective of this paper is twofold: first we use the methodology developed by Goolsbee and Klenow (2006) (G&K) that estimates the consumer's surplus of Internet's connection for France in 2005. Second, our paper challenges the initial methodology developed by G & K by using two complementary hypotheses and a Heckman's two stage estimation method. The first hypothesis take into account the concavity of the demand function of Internet and the second adds more realistic non-monetary variables. We also make some differentiation between Internet adoption and access frequency patterns using Heckman's (1976) correction procedure to resolves the selection problem. We find that French time opportunity cost is three times more important than connection cost. We find also that high-income people were more able to adopt Internet, but they spend less time online than low-income ones. In 2005, the French consumer surplus ranged between 1240$ and 3126$ if we use the G& K methodology, between 1679$ and 3126$ if we use our concave demand function, but between 2107$ and 2651$ if we use our two stage estimation method.

Suggested Citation

  • Walid Hadhri & Mohamed Ayadi & Adel Ben Youssef, 2012. "Difference between Adoption and Access Frequency to Internet and Consumer Surplus," Post-Print halshs-00937177, HAL.
  • Handle: RePEc:hal:journl:halshs-00937177
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00937177
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    References listed on IDEAS

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    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    2. repec:bla:jindec:v:50:y:2002:i:3:p:237-63 is not listed on IDEAS
    3. Jeremy Greenwood & Karen A. Kopecky, 2013. "Measuring The Welfare Gain From Personal Computers," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 336-347, January.
    4. Austan Goolsbee & Peter J. Klenow, 2006. "Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet," American Economic Review, American Economic Association, vol. 96(2), pages 108-113, May.
    5. Goldfarb, Avi & Prince, Jeff, 2008. "Internet adoption and usage patterns are different: Implications for the digital divide," Information Economics and Policy, Elsevier, vol. 20(1), pages 2-15, March.
    6. Erik Brynjolfsson & Yu (Jeffrey) Hu & Michael D. Smith, 2003. "Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers," Management Science, INFORMS, vol. 49(11), pages 1580-1596, November.
    7. Amil Petrin, 2002. "Quantifying the Benefits of New Products: The Case of the Minivan," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 705-729, August.
    8. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    9. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-597, June.
    10. Chaudhuri, Anindya & Flamm, Kenneth S. & Horrigan, John, 0. "An analysis of the determinants of internet access," Telecommunications Policy, Elsevier, vol. 29(9-10), pages 731-755, October.
    11. Jerry A Hausman & Gregory K Leonard, 2002. "The Competitive Effects of a New Product Introduction: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 237-263, September.
    12. Austan Goolsbee & Amil Petrin, 2001. "The Consumer Gains from Direct Broadcast Satellites and the Competition with Cable Television," NBER Working Papers 8317, National Bureau of Economic Research, Inc.
    13. Hausman, Jerry A, 1981. "Exact Consumer's Surplus and Deadweight Loss," American Economic Review, American Economic Association, vol. 71(4), pages 662-676, September.
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    Cited by:

    1. González Chapela, Jorge, 2016. "Disentangling income and price effects in the demand for time online," Information Economics and Policy, Elsevier, vol. 35(C), pages 65-75.

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