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Quality-Adjusted Prices for the American Automobile Industry: 1906-1940

In: The Economics of New Goods

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  • Daniel M. G. Raff
  • Manuel Trajtenberg

Abstract

We push the span of hedonic price calculations for automobiles backwards towards the industry's birth. Most of the real change that occurred between 1906 and 1982 occurred between 1906 and 1940. During these years, hedonic prices fell at an average annual rate of 5%. The pace was brisker still during the first 8-12 years. Our measured declines can be decomposed into price and quality components. Our calculations suggest that 60% of the overall decline 1906-1940 was due to process innovation and only 40% to product innovation or quality change per se. Regressors representing mechanical systems matter in these calculations.
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Suggested Citation

  • Daniel M. G. Raff & Manuel Trajtenberg, 1996. "Quality-Adjusted Prices for the American Automobile Industry: 1906-1940," NBER Chapters, in: The Economics of New Goods, pages 71-108, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:6065
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    References listed on IDEAS

    as
    1. Anonymous, 1991. "The Automobile Industry," Business History Review, Cambridge University Press, vol. 65(4), pages 1-1, January.
    2. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    3. Bresnahan, T.F. & Raff, D.M.G., 1993. "Technological Heterogeneity, Adjustment Costs, and the Dynamics of Plant Shutdown Behavior: The American Motor Vehicule Industry in the Time of the Great Depression," Papers 93-09, Columbia - Graduate School of Business.
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    Cited by:

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    3. Edquist, Harald, 2005. "Do hedonic price indexes change history? The case of electrification," SSE/EFI Working Paper Series in Economics and Finance 586, Stockholm School of Economics, revised 29 Apr 2005.
    4. Ramana Nanda & William R. Kerr, 2015. "Financing Innovation," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 445-462, December.
    5. Axhausen, K.W. & Froelich, P. & Tschopp, M., 2011. "Changes in Swiss accessibility since 1850," Research in Transportation Economics, Elsevier, vol. 31(1), pages 72-80.
    6. Tooze, Adam (Туз, Адам), 2016. "Europe on the Brink [Европа На Грани]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 138-175, June.
    7. Rohlfs, Chris & Sullivan, Ryan & Kniesner, Thomas J., 2013. "Hedonic Estimation under Very General Conditions Using Experimental and Quasi-Experimental Designs," IZA Discussion Papers 7554, Institute of Labor Economics (IZA).
    8. DUo Qin & Yimeng Liu, 2013. "Modelling Scale Effect in Crosssection Data:The Case of Hedonic Price Regression," Working Papers 184, Department of Economics, SOAS University of London, UK.
    9. Andreas Chai, 2018. "Household consumption patterns and the sectoral composition of growing economies: A review of the interlinkages," Discussion Papers in Economics economics:201802, Griffith University, Department of Accounting, Finance and Economics.
    10. Jaworski, Taylor, 2020. "Specification and structure in economic history," Explorations in Economic History, Elsevier, vol. 77(C).
    11. Eriksen, Michael D. & Kniesner, Thomas J. & Rohlfs, Chris & Sullivan, Ryan, 2016. "Toward more general hedonic estimation: Clarifying the roles of alternative experimental designs with an application to a housing attribute," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 54-62.
    12. Renato Fonseca, 2015. "Quality Change in Brazilian Automobiles," Discussion Papers 0066, Instituto de Pesquisa Econômica Aplicada - IPEA.
    13. Fonseca, Renato, 1999. "The Brazilian Automobile Industry in the 1980s: the Lost Decade?," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 53(1), January.
    14. Peter Thompson & Doug Waldo, 2000. "Process Versus Product Innovation: Do Consumption Data Contain Any Information?," Southern Economic Journal, John Wiley & Sons, vol. 67(1), pages 155-170, July.

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    JEL classification:

    • N6 - Economic History - - Manufacturing and Construction
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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