Demand Analysis of Termite Control Service in Jakarta

Abstract

Termite is an economically important pest species in the pest control industry and considered as one of the urban pests. Although it had caused a great loss, only a few studies on termite control demand were found. This study attempted to identify determinants and build the econometric model of termite control demand in Jakarta. The findings are expected to give the pest control industry a better understanding of the pest control market. Two ad-hoc models, linear and double log models, were investigated using the Least Square Dummy Variable (LSDV) technique. The results showed that the double log model was found better than the linear model based on sign expectation and significance. The price of termite control service, building permits, price of structural metals and dummy variables for the large company were statistically significant determinants, whereas dummy variables for risk class were not. Termite control demand for medium and small companies was not significantly different, but both of them were significantly lower than demand for the large company. This study also found that the demand for termite control was elastic.Keywords: demand analysis, econometric modeling, pest control, termite control, urban pest