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Aggregate Price Indices, New Goods, and Generics

Author

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  • Franklin M. Fisher
  • Zvi Griliches

Abstract

This paper examines the appropriate treatment in the cost-of-living index of the appearance of new varieties of old goods. Existing theory here applies to individual households. Thus, we first show in what sense Laspeyres and Paasche indices for groups of households can be considered approximations to theoretically desirable group indices and then go on to the case of new goods. We apply our results to the case of the introduction of generics in pharmaceuticals and show that proper treatment can make a considerable difference.

Suggested Citation

  • Franklin M. Fisher & Zvi Griliches, 1995. "Aggregate Price Indices, New Goods, and Generics," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 229-244.
  • Handle: RePEc:oup:qjecon:v:110:y:1995:i:1:p:229-244.
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    File URL: http://hdl.handle.net/10.2307/2118516
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    Cited by:

    1. Joan Ramon Borrell Arque, 1997. "Prices of Medicines a Case-Study on the impact of the rate-of-return regulation in the United Kingdom," Working Papers in Economics 21, Universitat de Barcelona. Espai de Recerca en Economia.
    2. Armstrong, Keir G., 2001. "Microeconomic Foundations for the Theory of International Comparisons," Journal of Economic Theory, Elsevier, vol. 101(2), pages 585-605, December.
    3. Angus Deaton, 1998. "Getting Prices Right: What Should Be Done?," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 37-46, Winter.
    4. Leonard I. Nakamura, 2009. "Intangible assets and national income accounting: measuring a scientific revolution," Working Papers 09-11, Federal Reserve Bank of Philadelphia.
    5. Leonard I. Nakamura, 2010. "Intangible Assets And National Income Accounting," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(s1), pages 135-155, June.
    6. Stéphane Jacobzonne & Edouard Martin & Vincent Perrin & Julien Werle, 1997. "Une approche hedonique de la formation des prix des médicaments remboursables," Économie et Prévision, Programme National Persée, vol. 129(3), pages 73-99.
    7. Hoffmann, Johannes, 1998. "Problems of inflation measurement in Germany," Discussion Paper Series 1: Economic Studies 1998,01e, Deutsche Bundesbank.
    8. David M. Cutler & Mark B. McClellan & Joseph P. Newhouse & Dahlia K. Remler, 2001. "Pricing Heart Attack Treatments," NBER Chapters,in: Medical Care Output and Productivity, pages 305-362 National Bureau of Economic Research, Inc.
    9. Ana Aizcorbe & Nicole Nestoriak, 2010. "Price Indexes for Drugs: A Review of the Issues," BEA Working Papers 0050, Bureau of Economic Analysis.
    10. Matthew D. Shapiro & David W. Wilcox, 1996. "Mismeasurement in the Consumer Price Index: An Evaluation," NBER Chapters,in: NBER Macroeconomics Annual 1996, Volume 11, pages 93-154 National Bureau of Economic Research, Inc.
    11. Ernst R. Berndt & David M. Cutler & Richard Frank & Zvi Griliches & Joseph P. Newhouse & Jack E. Triplett, 2001. "Price Indexes for Medical Care Goods and Services -- An Overview of Measurement Issues," NBER Chapters,in: Medical Care Output and Productivity, pages 141-200 National Bureau of Economic Research, Inc.
    12. Joan-Ramon Borrell & Jayashree Watal, 2002. "Impact of Patents on Access to HIV/AIDS Drugs in Developing Countries," CID Working Papers 92, Center for International Development at Harvard University.
    13. Adam Copeland, 2013. "Seasonality, consumer heterogeneity and price indexes: the case of prepackaged software," Journal of Productivity Analysis, Springer, vol. 39(1), pages 47-59, February.
    14. Charles R. Hulten, 1997. "Quality change in the CPI," Review, Federal Reserve Bank of St. Louis, issue May, pages 87-100.

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