nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2013‒12‒20
four papers chosen by
Edoardo Marcucci
Universita' di Roma Tre

  1. Flex Cars and Competition in Ethanol and Gasoline Retail Markets By Juliano Assuncao; Joao Paulo Pessoa; Leonardo Rezende
  2. Consumer choice of electricity supplier: Investigating preferences for attributes of electricity services. By Ndebele, T.; Marsh, D.
  3. Consumer attitudes towards and willingness to pay for NZ food attributes in the UK, China and India and the impact on NZ producer returns By Saunders, Caroline; Guenther, Meike; Tait, Peter; John, Saunders
  4. Scarcity Of Canterbury’s Water: Its Multiple, Conflicting Uses By Miller, Sini; Tait, Peter; Saunders, Caroline

  1. By: Juliano Assuncao; Joao Paulo Pessoa; Leonardo Rezende
    Abstract: In Brazil, gasoline and ethanol coexist as automotive fuels and are becoming closer substitutes as flex cars become more widely adopted. We employ this source of variation in a large panel of weekly prices at the station level to show that fuel prices have fallen in response to this change. This finding is evidence of market power in fuel retail and indicates that innovations that increase consumer choice benefit even those who choose not to adopt them. We also propose a model of price competition in this market and use it to estimate demand from price response functions.
    Keywords: Flex-fuel vehicles, Gasoline, Ethanol, Price competition, Spatial Competition, Discrete equilibrium price dispersion
    JEL: L11 L13 L62 L71
    Date: 2013–12
  2. By: Ndebele, T.; Marsh, D.
    Abstract: The retail electricity market in New Zealand is evolving as the government continues to promote the development of a competitive and efficient market. Encouraging consumer switching through the “What’s My Number” campaign is expected to put pressure on electricity retailers to reduce prices. Recent reports indicate that relatively few customers have switched supplier in the past two years despite potential average savings of NZ$165 per year per household. This suggests that non-price factors are also important determinants of switching behavior. We use choice experiments to investigate residential consumers’ preferences for the attributes of electricity suppliers and the possible role of attitudes in explaining preference heterogeneity among the sampled respondents. Data required for the study was collected through a web survey administered to an online panel of bill payers in New Zealand. Willingness to pay (WTP) is estimated for attributes of electricity suppliers such as renewable portfolio, local ownership, discount rates, fixed rate plan, loyalty rewards and supplier type. WTP estimates indicate the importance of the attributes and hence provide guidance to suppliers in designing their price and service offers. Knowledge of how attitudes influence switching behavior may inform future policy directed at stimulating competition in the retail market.
    Keywords: electricity suppliers, environmental attitude, choice experiments, latent class model, willingness to pay, Consumer/Household Economics, Demand and Price Analysis, Financial Economics, Resource /Energy Economics and Policy,
    Date: 2013–08
  3. By: Saunders, Caroline; Guenther, Meike; Tait, Peter; John, Saunders
    Abstract: This study examined consumer attitudes towards food attributes and origins, alongside consumer’s willingness to pay (WTP) for food certified for these attributes in China, India and the UK. The study used surveys including a choice experiment undertaken in each country. The economic impact of the WTP for food certification in each of these countries on New Zealand was also assessed using a partial equilibrium trade model. Results showed environmental, social and basic attributes in food products were valued positively by consumers in all countries, with WTP up to 77 per cent extra for food products certified for various attributes.
    Keywords: WILLINGNESS TO PAY, CHOICE EXPERIMENT, TRADE MODELLING, FOOD LABELLING, SUSTAINABILITY, CROSS-COUNTRY COMPARISON, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Crop Production/Industries, Demand and Price Analysis, Environmental Economics and Policy, Farm Management, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Land Economics/Use, Livestock Production/Industries, Production Economics,
    Date: 2013–08
  4. By: Miller, Sini; Tait, Peter; Saunders, Caroline
    Abstract: Canterbury freshwater management is the focus of important decisions with significant challenges. Applying choice modelling, this study explores how Canterbury residents value freshwater attributes related to environmental, economic, social and cultural elements of wellbeing. In particular, this study explores how values for Māori cultural element of water resource relate to the other elements. Results indicate that people value all freshwater attributes considered here, with highest willingness to pay for environmental benefits followed by cultural, recreational and employment benefits. The preference ranking can provide useful information for prioritisation of Canterbury freshwater management objectives.
    Keywords: CHOICE MODELLING, FRESHWATER MANAGEMENT, WILLINGNESS TO PAY, CULTURAL VALUES, Agribusiness, Agricultural and Food Policy, Demand and Price Analysis, Environmental Economics and Policy, Land Economics/Use, Research Methods/ Statistical Methods,
    Date: 2013–08

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