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Operating System Prices In The Home Pc Market

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  • Jerome Foncel
  • Marc Ivaldi

Abstract

Because the demand for OS is a derived demand revealed through the demand for PCs and because its elasticity is relatively small, the profit-maximizing price of DOS/WIN that would result from a static equilibrium is much higher than the observed price. We investigate this assertion empirically by fitting a differentiated-products model of the home PC market to panel data of all PC brands sold in the G7 countries over the period 1995-1999. The results confirm that the low value of the aggregate elasticity of demand for PCs is the result of differentiation and substitution among PCs. Copyright Blackwell Publishing Ltd. 2005.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The Journal of Industrial Economics.

Volume (Year): 53 (2005)
Issue (Month): 2 (06)
Pages: 265-297

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Handle: RePEc:bla:jindec:v:53:y:2005:i:2:p:265-297

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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Cited by:
  1. John Van Reenen, 2006. "The Growth of Network Computing: Quality-Adjusted Price Changes for Network Servers," Economic Journal, Royal Economic Society, vol. 116(509), pages F29-F44, 02.
  2. Ivaldi, Marc & Lörincz, Szabolcs, 2005. "A Full Equilibrium Relevant Market Test: Application to Computer Servers," IDEI Working Papers 341, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. John Van Reenen, 2004. "Is there a market for work group servers? Evaluating market level demand elasticities using micro and macro models," LSE Research Online Documents on Economics 773, London School of Economics and Political Science, LSE Library.

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