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Approaches to performance measurement in hedonic analysis: Price indexes for laptop computers in the 1990's

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  • Paul Chwelos

Abstract

This paper estimates price indexes for laptop personal computers using hedonic methods and data taken from PC Magazine technical reviews. We use benchmark test results to construct a measure of system performance that encapsulates factors that have previously gone unmeasured, such as the interactions between hardware components. The resulting hedonic function is parsimonious yet has good explanatory power. A second approach to performance measurement is developed using a set of technical proxies that are shown to closely approximate the benchmark test scores, and are thus nearly perfectly equivalent in terms of resulting price index estimates. While not as parsimonious as a single performance measure, these proxies have the advantage of not requiring direct performance testing, and could thus be applied to larger data sets. Laptops were found to have declined in quality-adjusted price at an average rate of 40% per year for the period 1990-1998.

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  • Paul Chwelos, 2003. "Approaches to performance measurement in hedonic analysis: Price indexes for laptop computers in the 1990's," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(3), pages 199-224.
    • Handle: RePEc:taf:ecinnt:v:12:y:2003:i:3:p:199-224
    DOI: 10.1080/10438590290013609
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    Cited by:

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    2. David M. Byrne & Stephen D. Oliner & Daniel E. Sichel, 2018. "How Fast are Semiconductor Prices Falling?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 679-702, September.
    3. Dakshina G. De Silva & Nidhi Thakur & Mengzhi Xie, 2013. "A hedonic price analysis of hearing aid technology," Applied Economics, Taylor & Francis Journals, vol. 45(16), pages 2315-2323, June.
    4. Koichiro Sano & Yasunobu Tomoda, 2019. "Persistent income gaps in an occupational choice model with multi‐goods," Australian Economic Papers, Wiley Blackwell, vol. 58(1), pages 1-20, March.
    5. Lashkaripour, Ahmad, 2020. "Weight-based quality specialization," Journal of International Economics, Elsevier, vol. 127(C).
    6. Kim, Namwoon & Srivastava, Rajendra K., 2007. "Modeling cross-price effects on inter-category dynamics: The case of three computing platforms," Omega, Elsevier, vol. 35(3), pages 290-301, June.
    7. Satoshi Nakano & Kazuhiko Nishimura, 2013. "Welfare gain from quality and price development in the Japan’s LCD TV market," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 889-908, September.
    8. Paul Chwelos & Ronald Ramirez & Kenneth L. Kraemer & Nigel P. Melville, 2010. "Research Note ---Does Technological Progress Alter the Nature of Information Technology as a Production Input? New Evidence and New Results," Information Systems Research, INFORMS, vol. 21(2), pages 392-408, June.
    9. Paul Windrum & Koen Frenken & Lawrence Green, 2017. "The importance of ergonomic design in product innovation. Lessons from the development of the portable computer," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 26(6), pages 953-971.
    10. Colin Davis & Yasunobu Tomoda, 2018. "Competing incremental and breakthrough innovation in a model of product evolution," Journal of Economics, Springer, vol. 123(3), pages 225-247, April.

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