Why Did Semiconductor Price Indexes Fall So Fast in the 1990s? A Decomposition
AbstractPrice deflators for semiconductors fell rapidly over the 1990s, pulled down by steep declines in the deflator for the microprocessor (MPU) segment that accelerated around 1995. A decomposition of a price index for Intel's MPUs suggests that virtually all of the declines in the price index--and the acceleration--can be attributed to quality increases associated with product innovation, rather than declines in the cost per chip. The sizable decline in Intel's margins from 1993--99 only accounted for about 6 percentage points of the average 24% decline per quarter in the price index and cannot explain the acceleration. (JEL D42, L63, O47) Copyright 2006, Oxford University Press.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 44 (2006)
Issue (Month): 3 (July)
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- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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