Discussion Papers no. 490

Quality adjusted price indexes for discrete goods

This paper discusses the construction and computation of a quality adjusted price index when the commodities are differentiated products, such as different brands of automobiles and refrigerators. The method we focus on is an extension of Trajtenberg's approach. A key result obtained in the paper is that the evolution of the quality adjusted price index depends crucially on the fraction of consumers that do not purchase a variant of the product. The method is applied to data on automobile demand in Norway from 1994 to 2002. Both the Laspeyres index and the index based on hedonic regression yield lower estimates of the pricees from 1999 to 2002 than does the quality adjusted price index. This is mainly due to variations in the fraction of persons who purchase new automobiles.

Om publikasjonen

Tittel

Quality adjusted price indexes for discrete goods

Ansvarlige

John K. Dagsvik, Bengt J. Eriksson, Astrid Mathiassen

Serie og -nummer

Discussion Papers no. 490

Utgiver

Statistics Norway

Emne

Discussion Papers

Antall sider

35

Målform

Engelsk

Om Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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