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Measuring the Welfare Gain from Personal Computers

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Abstract

The welfare gain to consumers from the introduction of personal computers is estimated here. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero. This implies that the good won't be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated/estimated using standard national income and product account data. The welfare gain from the introduction of personal computers is in the range of 2 to 3 percent of consumption expenditure.

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Bibliographic Info

Paper provided by Economie d'Avant Garde in its series Economie d'Avant Garde Research Reports with number 15.

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Length: 13 pages
Date of creation: Sep 2007
Date of revision:
Handle: RePEc:eag:rereps:15

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Web page: http://www.jeremygreenwood.net/EAG.htm

Related research

Keywords: Compensating Variation; Computers; Electricity; Equivalent Variation; Fisher Ideal Price Index; New Goods; Technological Progress; Tornqvist Price Index; Welfare Gain;

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  1. Austan Goolsbee & Peter J. Klenow, 2006. "Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet," Discussion Papers 05-010, Stanford Institute for Economic Policy Research.
  2. Austan Goolsbee & Amil Petrin, 2004. "The Consumer Gains from Direct Broadcast Satellites and the Competition with Cable TV," Econometrica, Econometric Society, vol. 72(2), pages 351-381, 03.
  3. Jeremy Greenwood & Gokce Uysal, 2003. "New Goods and the Transition to a New Economy," Economie d'Avant Garde Research Reports 5, Economie d'Avant Garde.
  4. Chatterjee, Satyajit, 1994. "Transitional dynamics and the distribution of wealth in a neoclassical growth model," Journal of Public Economics, Elsevier, vol. 54(1), pages 97-119, May.
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  1. Café com açúcar
    by Leonardo Monasterio in Blog do Leonardo Monasterio on 2009-09-04 10:12:00
  2. Cofffe and Sugar
    by Leonardo Monasterio in Leonardo Monasterio's Blog on 2009-09-04 19:52:00
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Cited by:
  1. Walid Hadhri & Mohamed Ayadi & Adel Ben Youssef, 2012. "Difference between Adoption and Access Frequency to Internet and Consumer Surplus," Post-Print halshs-00937177, HAL.
  2. Tim Leunig & Joachim Voth, 2011. "Spinning Welfare: the Gains from Process Innovation in Cotton and Car Production," CEP Discussion Papers dp1050, Centre for Economic Performance, LSE.
  3. Hersh, Jonathan & Voth, Hans-Joachim, 2009. "Sweet Diversity: Colonial Goods and the Rise of European Living Standards after 1492," CEPR Discussion Papers 7386, C.E.P.R. Discussion Papers.

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