This paper puts forward a methodology for the measurement of product innovations using a value metric, that is, equating the "magnitude" of innovations with the welfare gains they generate. This research design is applied to the case of computed tomography scanners, a revolutionary innovation in medical technology. The econometric procedure centers on the estimation of a discrete choice model (the nested multinomial logit), which yields the parameters of a utility function defined over the changing quality dimensions of the innovative product. The estimated flow of social gains from innovation is used to compute a social rate of return to R&D, to explore the interrelation between innovation and diffusion, and to trace the time profile of benefits. Copyright 1989 by University of Chicago Press.
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Volume (Year): 97 (1989) Issue (Month): 2 (April) Pages: 444-79 Download reference. The following formats are available: HTML
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Handle: RePEc:ucp:jpolec:v:97:y:1989:i:2:p:444-79
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