Spatial Diffusion of Innovation: A Spatial Panel Analysis of Electronic Toll Collecting Transponders in Japan

The spatial panel model is applied to a new data set: monthly data of the number of ETC (Electronic Toll Collecting) transponders newly installed in 47 Japanese prefectures. The model incorporates marketing variables and highway-related variables. Regarding the spatial panel model, this work estimates fixed-effect and random-effect model for spatial-lag model and spatial-error model. For each formulation, four types of weight matrix, geographical adjacency matrix, automobile traffic OD (Origin-Destination) table, telecommunication OD, and the inverse of the geographical distance are employed. Among estimated models, fit of "the fixed effect spatial-lag model with the inverse of distance as the weight matrix" is the best. The positive and significant spatial-lag parameter means diffusion in neighbor area promotes diffusion in other area. In case of the ETC transponder promotions, we find that the promotions at the early stage are effective but promotions at later stages are not. In addition to sales promotion of ETC transponders, the number of ETC gates and highway fee promotion for ETC drivers are also significant.