What is the Profit-Making Model? The Hedonic Analysis of Mobile Handsets in China

Which handset feature is the most valuable to the customer of a mobile phone? This paper provides a hedonic analysis of mobile handsets in China, using 918 different handset models from 14 manufacturers launched from 2003 to 2008. Both basic and advanced characteristics of mobile handsets are incorporated in the hedonic regression model for measuring the corresponding shadow prices. In supplement to that, specific attention has been given to address the problems such as method to control the instability of the parameter estimation over time and how to measure the heterogeneous characteristics of individual handset for both the manufacturers and customers. According to the estimated results, suggestions are provided for the industrial practitioners at the end of this paper.