Faster, smaller, cheaper: an hedonic price analysis of PDAs
AbstractWe compute quality-adjusted price indexes for personal digital assistants (PDAs) for the period 1999 to 2004. Hedonic regressions indicate that prices are related to processor generation and clock speed, memory capacity, screen size and quality and the presence of a digital camera or wireless capability. A particularly salient feature of PDAs is portability, where we find: (i) purchasers value the energy density of the battery technology (e.g. lithium ion) rather than the battery life in hours; and (ii) the physical characteristics of the PDA (e.g. weight, volume) are nonlinearly related to price, suggesting that valuation of the physical form of PDAs does not bear a simple linear relationship to characteristics, either in absolute terms ('smaller is better') or vs. an ergonomic 'sweet spot'. Rather, portability characteristics are correlated with other desirable attributes, making the relationship between price and portability difficult to disentangle. However, hedonic price indexes are robust across different measures of the portability of PDAs. Hedonic indexes using the dummy variable, characteristics prices, and imputation approaches decline on average between 19 and 26% per year. A matched model price index computed from a subset of observations declines at 19% per year, while a fixed-effects hedonic index declines at 14% per year.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 40 (2008)
Issue (Month): 22 ()
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Web page: http://www.tandfonline.com/RAEC20
Other versions of this item:
- Paul D. Chwelos & Ernst R. Berndt & Iain M. Cockburn, 2004. "Faster, Smaller, Cheaper: An Hedonic Price Analysis of PDAs," NBER Working Papers 10746, National Bureau of Economic Research, Inc.
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
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