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Effects of the Entry and Exit of Products on Price Indexes

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  • Abe, Naohito
  • Inakura, Noriko
  • Tonogi, Akiyuki

Abstract

This study analyzes the effects of product turnover for price measurements. In addition to variety effects, we consider the effects of the price differentials between new and incumbent products. The decomposition of a unit value price index (UVPI) into price change effects, substitution effects, and turnover/new product effects reveals the magnitude and sources of differences between the UVPI and the Cost of Living Indexes with variety effects. Using a large-scale scanner data, we find that the product turnover effects that reflect the price gap between new and old goods are quantitatively important when constructing a general price level index.

Suggested Citation

  • Abe, Naohito & Inakura, Noriko & Tonogi, Akiyuki, 2017. "Effects of the Entry and Exit of Products on Price Indexes," RCESR Discussion Paper Series DP17-2, Research Center for Economic and Social Risks, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:rcesrs:dp17-2
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/28466/dp17-2.pdf
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    References listed on IDEAS

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    Cited by:

    1. Yasushi Hara & Akiyuki Tonogi & Konomi Tonogi, 2019. "Impact of R&D Activities on Pricing Behaviors with Product Turnover," Working Papers hal-02318466, HAL.
    2. Yuki Teranishi, 2017. "Product Cycles and Prices:Search Foundation," UTokyo Price Project Working Paper Series 079, University of Tokyo, Graduate School of Economics.
    3. Shiratsuka, Shigenori, 2021. "Lower-Level Substitution Bias in the Japanese Consumer Price Index: Evidence from Government Micro Data," Discussion Paper Series 722, Institute of Economic Research, Hitotsubashi University.
    4. HARA Yasushi & TONOGI Akiyuki & TONOGI Konomi, 2020. "Impact of R&D Activities on Pricing Behaviors with Product Turnover," Discussion papers 20006, Research Institute of Economy, Trade and Industry (RIETI).
    5. Jane Lankes & Mary K. Shenk & Mary C. Towner & Nurul Alam, 2022. "Dowry Inflation: Perception or Reality?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 41(4), pages 1641-1672, August.

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    More about this item

    Keywords

    Price Index; Cost of Living Index; Unit Value Price; POS Data;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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