Modeling of Price Effects for the Adoption of LCD TV

Abstract

This paper focuses on the global LCD TV panel shipments from the first quarter of 2002 to the second quarter of 2008. The aims of this study are to incorporate realistic price data to systematically inquiry effects of innovation, imitation, price elasticity and potential market size in global LCD TV panel diffusions. Two different models, the Bass model and the modified one are thus numerically solved and optimized to estimate the market dynamics of LCD TVs, where the results among the models and collected data in the past decade are compared and validated for the best accuracy. The results of this study imply that the positive internal influence is mainly through consumers' word of mouth. Previous LCD TV adopters persuade the potential ones to imitate the former in the TV transaction decisions. Particularly, LCD TV price reduction stimulates the successive LCD TV consumers, which indicates the significance of the modeled price effect in LCD TV adoptions. Empirical results for the past decade data shows that the 32-inch LCD TV remains the mainstream due to a largest size of potential market. In addition, the model with considering the effect of price performs better in fitness than that of the conventional one and the prediction of modified model is superior to that of the Bass model for 32-inch LCD TVs.