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Hedonic Price Indexes for Spreadsheets and an Empirical Test of the Network Externalities Hypothesis

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Author Info

  • Gandal, N.

Abstract

In this paper, I first estimate hedonic price equations for computer spreadsheet programs, and then use the analysis to empirically test whether network externalities exist in this industry. The study shows that consumers are willing to pay a significant premium for spreadsheets that are compatible with the Lotus platform and for spreadsheets that offer links to external data bases, and a smaller premium for spreadsheets that offer local area network compatibility. These results support the hypothesis that the computer spreadsheet market exhibits network externalities. Finally, the quality-adjusted (real) price index of computer spreadsheets declined by approximately 15 percent per year from 1986-1991.

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Bibliographic Info

Paper provided by Tel Aviv in its series Papers with number 18-92.

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Length: 21 pages
Date of creation: 1992
Date of revision:
Handle: RePEc:fth:teavfo:18-92

Contact details of provider:
Postal: Israel TEL-AVIV UNIVERSITY, THE FOERDER INSTITUTE FOR ECONOMIC RESEARCH, RAMAT AVIV 69 978 TEL AVIV ISRAEL.
Phone: 972-3-640-9255
Fax: 972-3-640-5815
Email:
Web page: http://econ.tau.ac.il/research/foerder.asp
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Keywords: prices ; computers;

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References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Church, Jeffrey & Gandal, Neil, 1993. "Complementary network externalities and technological adoption," International Journal of Industrial Organization, Elsevier, vol. 11(2), pages 239-260, June.
  2. Robert J. Gordon, 1987. "The Postwar Evolution of Computer Prices," NBER Working Papers 2227, National Bureau of Economic Research, Inc.
  3. Ernst R. Berndt & Zvi Griliches, 1993. "Price Indexes for Microcomputers: An Exploratory Study," NBER Chapters, in: Price Measurements and Their Uses, pages 63-100 National Bureau of Economic Research, Inc.
  4. Gandal, N., 1992. "Hedonic Price Indexes for Spreadsheets and an Empirical Test of the Network Externalities Hypothesis," Papers 18-92, Tel Aviv.
  5. Gilbert, Richard J, 1992. "Symposium on Compatibility: Incentives and Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 1-8, March.
  6. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
  7. Katz, Michael L & Shapiro, Carl, 1992. "Product Introduction with Network Externalities," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 55-83, March.
  8. Trajtenberg, Manuel, 1989. "The Welfare Analysis of Product Innovations, with an Application to Computed Tomography Scanners," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 444-79, April.
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Cited by:
  1. Onderstal, A.M., 2002. "Auctions for Extra Capacity in an Oligopolistic Market with Network Effects," Discussion Paper 2002-33, Tilburg University, Center for Economic Research.
  2. Gandal, N., 1992. "Hedonic Price Indexes for Spreadsheets and an Empirical Test of the Network Externalities Hypothesis," Papers 18-92, Tel Aviv.

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