CUSTOMER PREFERENCES FOR RELIABLE POWER-SUPPLY - USING DATA ON ACTUALCHOICES OF BACKUP EQUIPMENT

This paper empirically examines customer preferences for the reliable sources of electricity, using data obtained from a survey of back-up s ystems owned by large computer users in Japan. The empirical results b ased on probabilistic discrete choice models indicate that (1) custome rs face a trade-off between the price and the reliability of the power supply, and (2) customer characteristics, such as types of business a nd levels of electricity usage, have significant impacts on the choice of back-up apparatuses. The estimates of cost changes which would off set reliability changes imply that the financial and communications se ctors are more concerned about reliability than are other sectors.