Aggregate Price Indices, New Goods, and Generics
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, the authors 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. The authors apply their results to the case of the introduction of generics in pharmaceuticals and show that proper treatment can make a considerable difference. Copyright 1995, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Volume (Year): 110 (1995)
Issue (Month): 1 (February)
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