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Measuring Quality Change due to Technological Externality in Multi-Feature Service Bundles

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  • Gupta, Abhay

Abstract

Technological innovation, externalities and network effects keep shifting the preference parameters in cellular telecommunication service sector. The paper suggests a framework to model these changes.It notes two channels that affect the service prices (in possibly opposite ways). In each corresponding period, consumer with lower reservation prices are shopping for the services. But these reservation prices are going up due to complementarity/ network effects. Under some reasonable assumptions on industry and cost structure, market data can be used to identify these changes. A price index is suggested that decomposes service bundle price changes into the change in price for same-quality of service and change in quality of the service bundle. Some interesting properties of these indexes are also discussed.

Suggested Citation

  • Gupta, Abhay, 2007. "Measuring Quality Change due to Technological Externality in Multi-Feature Service Bundles," MPRA Paper 9284, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9284
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    File URL: https://mpra.ub.uni-muenchen.de/9284/1/MPRA_paper_9284.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other

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